Wednesday, February 21, 2024

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Experts caution that the suggested halt of the fuel tax could lead to significant ramifications.


By Luisa Maria Jacinta C. Jocson, Reporter

The proposition to halt fuel usage the

Taxes could assist in managing the situation.fl

Experts stated that the action aims to support and aid underprivileged sectors, but also cautioned about its potential effects.

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In our opinion, the temporary elimination of excise tax on fuel items will assist in controlling the consumer price index (CPI).fl

It is possible that the value may decrease by approximately 0.5 percentage points from the initial value.figure,” Makoto Tsuchiya, lecon

I am an assistant economist at Oxford Ecolecon.

The company Nomics stated in an email.

Legislators previously suggested a temporary halt on fuel taxes in response to a recent increase in gas prices, which could potentially lead to inflation.


This week, oil companies decreased the cost of diesel and gasoline by P0.20 per liter, and kerosene by P0.50 per liter. Despite these changes, the overall increase for the year remains at P17.30 per liter for gasoline, P13.40 per liter for diesel, and P9.44 per liter for kerosene.

According to a message sent via Viber by China Banking Corp.’s Chief Economist Domini S. Velasquez, we believe that suspending the excise tax and VAT (value-added tax) on petroleum products in response to rising prices would not be a feasible option for the government. This would result in a decrease in revenue collections and essentially provide subsidies for higher income households.

Earlier, Benjamin E. Diokno, the Finance Secretary, expressed his belief that the suggested suspension of the fuel tax is not a wise decision and may have negative repercussions.

The finance department 

It is predicted that the halt of VAT and excise tax on fuel products could result in a loss of approximately P72.6 billion, equivalent to 0.3% of the country’s GDP, in the fourth quarter. If the collection of fuel taxes is suspended in 2024, the estimated revenue losses could rise to P280.5 billion, which is approximately 1.1% of the GDP.

“We also share the concern over the impact the suspension will have on government revenue, especially at a time when fiscal consolidation is much needed given the higher public debt. Unless this is accompanied by a reduction in spending, the resulting higher fiscal deficit will further narrow the already limited fi

According to Mr. Tsuchiya of Oxford Economics, the scale of the space is significant.

According to an email from Alberto R. Dalusung III, an Energy Transition Advisor at the Institute for Climate and Sustainable Cities (ICSC), halting the collection of necessary taxes could have a detrimental impact on government income.

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According to a Viber message from Phoenix Petroleum Philippines, Inc., their decreased profits will also impede the progress of government initiatives and social welfare programs that rely on these taxes.

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At the bottom of the economic ladder, individuals are less inclined to possess automobiles.

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Rewording: The individuals who are employed in passenger transportation services, including those who receive some benefits.fiting from subsidies) and those who own their own vehicles, i.e. those relatively better off,” he added.

Earlier, Chairman of the House Committee on Ways and Means, Albay Representative Jose Ma. Clemente S. Salceda, pointed out the need for Congress to make changes to the Tax Reform for Acceleration and Inclusion in order to halt the imposition of fuel taxes.

According to Eleanor L. Roque, the tax principal at P&A Grant Thornton, the Tax Code’s provisions for suspending excise tax on petroleum when certain price thresholds are met have expired.

She stated in a Viber message that there is a necessity for a revised law to address unexpected circumstances such as the current situation we are facing.

“I believe the government cannot ignore the current circumstances. Therefore, the legislators must take prompt action to pass the necessary legislation, and this could be an appropriate opportunity to declare the bill as urgent,” she stated.

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Changing fuel tax rates to a temporary halt.

According to Mr. Zorrilla, removing taxes on fuels will have positive effects on the public by promoting travel, boosting purchasing power, and potentially lowering production costs for industries that rely on fuels.

Transport organizations also expressed their approval of the suggestion. Mar S. Valbuena, the president of Manibela, stated that they would rather have the government halt the collection of excise taxes on fuel instead of providing fuel subsidies.

xcitement offfcts of subsidies because the prices of fuel are so high. The subsidies will only cover a few days for us.

The impact of subsidies is evident due to the exorbitant cost of fuel. However, these subsidies will only sustain us for a short period of time. We are greatly affected by the high prices of fuel and can only rely on subsidies for a few days.ff

“The increase in fuel prices is having an effect,” he stated in a Viber message, using a combination of English and Filipino.

Modesto Floranda, the President of Piston, expressed the belief that the government should have eliminated fuel taxes earlier.

“Our stance on this issue has been consistent for a long time. We are not just calling for a suspension, but for the complete abandonment of these fuel taxes,” he stated in a phone conversation, speaking in a combination of English and Filipino.

The current fuel subsidy is P6,500. According to him, if we use approximately 20 liters per day, the subsidy will only cover three days for drivers and operators.

According to Mr. Floranda, subsidies may provide temporary relief for drivers and operators, but they will not address the underlying problem of increasing prices.

He stated that subsidies should not only benefit one industry because all consumers suffer from high prices.

flation.

“An important factor would be the timeliness and target eff

The subsidy’s efficacy should be maximized by ensuring swift and minimal leakages upon its release, according to her statement.