DAVAO CITY, Philippines – The Marcos Jr. administration has suspended its excise tax collection on LPG and kerosene.
It says this will benefit households who are feeling the impact of rising fuel prices due to the US-Iran conflict. But IBON Foundation said otherwise, as it suggested cutting excise taxes in diesel and gasoline would benefit Filipino families.
The government began the suspension of excise taxes on LPG and kerosene last April 13. This reduces the price of LPG by around Php 3.36 pero kilo or Php37 per tank, and another Php 5.60 per liter for kerosene.
The reduction of prices in LPG used for household cooking means more money saved for families, says Finance Secretary Frederick Go.
“This means the benefits extend beyond the poorest households to also support middle-income families… every peso saved on fuel costs means more resources for food, education, and healthcare,” Go said in a press statement.
The finance chief also added that this decision not only protects families, but would also be “safeguarding our fiscal stability.”
Progressive groups and analysts have called for suspension or removal of VAT and excise taxes in petroleum prices following the oil price shock last March due to the war, but Marcos Jr.’s economic managers said the government stands to lose billions in revenue.
The government has planned to provide fuel subsidies for public transport drivers, many of whom have stopped operations as they no longer earn income due to the steep fuel price.
Insufficient aid
But transport group PISTON and IBON point out that the government assistance remains limited.
PISTON said that jeepneys and taxis consuming an average of 30 liters of diesel per day are already paying Php 750 in excise taxes, or around Php 22,500 a month, based on the current diesel price of Php 170.
“Mas malaki na sa minimum wage ang binabayarang buwis sa diesel ng mga tsuper (Drivers are now paying more in diesel taxes than the minimum wage),” the group said in a statement.
IBON Executive Director Sonny Africa pointed out that the government collects about Php 400 billion yearly from excise oil tax, but “there’s a 100% chance that the transport sector or poor families won’t get Php 400 billion in fuel subsidies.”
He also pointed out that the cash assistance now rolled out to drivers nationwide only targets around 400,000 drivers whereas 1.8 million are not included.
This distribution across the nation has encountered problems, such as in Davao early this month where tricycle drivers complained of not being in the master list.
14 million families
Africa said the government’s economic team failed to see that more Filipinos are affected by the prices of diesel and gasoline as prices are increased due to its steep price.
“The burden is not just from direct fuel purchases, but from how fuel taxes are built into the prices of basic commodities,” Africa said.
An analysis from IBON showed that of the 14 million poor families, half of them or 7.1 million families use LPG, while kerosene users are fewer at 1.3 million families, making the tax cut “more ineffectual.”
“LPG users will not really get much benefits. They only buy four to six 11-kg LPG tanks a year which means that the excise tax cuts will save them just a puny Php13-18 monthly on average even if the cuts were kept for a whole year. The domino effect on the prices of other goods and services bought by the poor is minimal, perhaps restricted to carinderias or restaurants,” its analysis said.
IBON points out that diesel is used by 3.4 million trucks, trailers, buses and utility vehicles.
Africa said “cutting diesel/ gasoline taxes will benefit all 14 million poorest families who buy food that’s transported or produced using diesel/gasoline — with potential savings of Php450-550 monthly.”
This week, the government announced a huge roll back in diesel and gasoline, as the global price of oil has lowered.
But IBON insists that the government can cut off excise taxes in oil and do better by finding alternative sources of revenues such as billionaire wealth tax and higher income taxes on corporations and high-income families.(davaotoday.com)
