An additional PHP200 per month subsidy has been proposed to help beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps) cope with the rising fuel prices.
Finance Secretary Carlos Dominguez III proposed the retention of excise taxes on fuel and use the money to be collected to extend subsidies to households belonging to the bottom 50 percent of the society, as well as drivers and operators of public utility vehicles (PUVs) and farmers and fisherfolk.
“This is sustainable. This is something that we can sustain and something that we can afford at this time. So I hope that, Mr. President, you will support these recommendations,” he said during President Rodrigo R. Duterte’s Talk to the Nation aired Wednesday morning.
Dominguez said estimated revenue losses from excise tax suspension are around PHP105.9 billion in 2022, PHP114.4 billion in 2023, and PHP123.6 billion in 2024.
“For the 10-year average of PHP160.3 billion a year to a total of PHP1.763 trillion for 10 years, this is equivalent to roughly one-half of 1 percent of our GDP (gross domestic product),” he added.
Dominguez said they expect to collect PHP131.4 billion from excise taxes and PHP15.8 billion from value added tax (VAT), or a total of PHP147.2 billion for this year.
He said this amount has been allocated under this year’s national budget to finance various expenses, such as the infrastructure and socioeconomic programs, as well as provide financing for salaries of state workers.
“So that money has already been allocated. And if (we) suspend this (the excise tax on fuel products) and we don’t collect it, what will happen is our debt-to-GDP (gross domestic product) ratio will go up from an estimated 7.7 percent to 8.2 percent,” he added.
Dominguez said if the country continues to spend the same amount of money, “we will have to borrow more money and the amount of debt that will bring up our debt-to-GDP ratio to about 61.4 percent.”
Economic managers have been prudent in managing the government finances even during the pandemic, noting that while expenses have increased, the proportion of debt vis-à-vis economy’s output has remained manageable and sustainable.
This development, they said, has allowed the country to retain its credit ratings amid the downgrades suffered by other countries.
Thus, the recommendation not to suspend the implementation of excise taxes of fuel products to get additional revenues for the government’s targeted subsidy program.
Dominguez said they estimate that if fuel prices in the international market reach USD100 per barrel, additional government revenues from VAT will amount to around PHP20 billion.
If oil prices rose to around USD110 per barrel, the additional revenues from VAT is PHP26 billion; at USD120 per barrel, PHP31.8 billion; at USD125 per barrel, PHP34.6 billion; and at USD130 per barrel, PHP37.5 billion, he added.
Source: Philippines News Agency
