The Department Of Finance Remains Opposed To The Suspension Of Fuel Excise Tax

The Department Of Finance Remains Opposed To The Suspension Of Fuel Excise Tax

The Department of Finance (DOF) reiterated on Tuesday that it opposes the suspension of fuel excise tax, despite recent price increases caused by the ongoing crisis between Russia and Ukraine.

The suspension of all excise taxes and value-added taxes on fuel will result in revenue losses of ₱138.8 billion, or 0.6 percent of the country’s gross domestic product, according to Finance Assistant Secretary Paola Alvarez.

Her comments follow repeated suggestions in Congress to suspend gasoline excise taxes, with the country already experiencing 11 weeks of price rises at the pump for petroleum goods.

According to Alvarez, if excise taxes were suspended from June to November as recommended by the House of Representatives, the government would lose P48.7 billion, and if they were suspended from June to December as proposed by the Senate, the country would lose ₱69.3 billion.

If the suspension is in place for the next ten years, through 2022, revenue losses might be as high as ₱1.5 trillion.

During her Laging Handa briefing, the Finance Assistant Secretary said: 

Hindi po tayo sang-ayon sa pagsuspinde ng excise taxes kasi po malaki po ang mawawala sa ating kaban o sa ating pera sa treasury ‘pag ginawa po natin yan.
(We do not agree with the suspension of excise taxes because we will incur huge losses in our coffers or in the funds in the treasury if we do that.)

The Bureau of the Treasury (BTr) borrowed ₱9.137 billion on Monday by issuing Treasury bonds, with ₱3.037 billion coming from the 91-day tenor, ₱3 billion from the 182-day tenor, and ₱3.1 billion from the 364-day tenor.

All tenors were oversubscribed, with a total offer of ₱15 billion being exceeded by ₱3.35 billion.

Alvarez justified the necessity for excise taxes, claiming that the money collected will be utilized to fund the government’s social services and infrastructure projects. She further explained that in order to recover from the epidemic, we must prioritize economic development and government expenditure. If not, our ability to recover to pre-pandemic economic levels would be hampered.

The excise taxes, according to the Finance official, are primarily aimed at higher-income households, which account for 48.8% of the overall fuel consumption in the country.

The Department of Energy (DOE) stated that the ongoing war between Russia and Ukraine has impacted worldwide pricing, which has influenced local prices.

According to the latest DOE statistics, as of March 8, 2022, year-to-date changes for gasoline, diesel, and kerosene were ₱13.25 per liter, ₱17.50 per liter, and ₱11.40 per liter, respectively.

As of March 10, 2022, the same data showed that gasoline prices in Metro Manila vary from ₱59.85 per liter (Caloocan) to ₱84.55 per liter (Muntinlupa), while diesel prices range from P55.20 per liter (Pasig) to P73.39 per liter (Taguig).

In response to the rising gas prices, the government has set aside P2.HP5 billion to distribute gasoline coupons to 377,000 eligible public utility vehicle drivers around the nation.


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