THE Department of Finance (DOF) said the suspension of the excise tax and the Value Added Tax (VAT) for petroleum products is unlikely to happen and would not agree to it.
During the Laging Handa public briefing, DOF spokesperson Assistant Secretary Paola Alvarez explained that looking into the overall situation, 48.8 percent of the consumption of petroleum products is made by the rich, while the poor or low-income wage earners only consume a little.
If the automatic suspension of the excise tax is allowed whenever there is a conflict like the Russia-Ukraine war that causes the spike in oil prices in the world market, only the rich will be happy and will be exempted from payment of taxes, and that the government will be unable to collect taxes that it can use for social services for the poor, which is supposed to come from excise tax.
According to Alvarez, what the government wants to happen is that the poor will benefit more from taxes such as the excise tax, while the rich that consumes more petroleum should pay bigger taxes.
That is why Alvarez said they recommended to President Rodrigo Duterte to provide targeted support to needy sectors such as the fuel subsidy.
Alvarez said that if the excise tax and VAT on petroleum products are suspended, around P138.8 billion will be lost in terms of government tax collection in one year, or about 0.6 percent of the country’s gross domestic product.
If this system on the excise tax and VAT continues every time the country faces problems on oil prices in the world market, the government will incur an estimated P1.5 trillion in losses until 2032.