Finance dept eyes 10M households for cash transfer program vis-a-vis oil excise tax hike bid

MANILA-- Some 10 million households will be placed under the government's cash transfer program for a period of one year once lawmakers approve the Department of Finance's (DOF) proposal to hike the excise tax on oil products.

This was disclosed by Finance Undersecretary Karl Chua during the hearing of the House of Representatives' ways and means committee Wednesday to assure lawmakers that the poor will not be negatively impacted by the proposed 10-percent increase in excise tax on oil.

Chua said 40 percent of the targeted 10 million families that will be covered by the non-conditional cash transfer are those who are already part of the government's Pantawid Pamilyang Pilipino Program (4Ps).

He said the proposed cash transfer program will be financed by the higher tax revenues from excise tax on oil.

"This is to bridge the gap and not a permanent program It's not the solution by itself," he said, citing that the real solution to alleviate the lives of the poor is to ensure the continued expansion of the domestic economy by building more infrastructure and to ensure inclusive growth.

Chua said the higher excise tax on oil will increase inflation rate by about 1.5 percentage point but the over-all inflation environment will remain manageable since the average rate of price increases in the country remains below the government's 2 percent to 4 percent target until 2019, with the 2016 figure at 1.8 percent.

He said the 1.5 percent projected uptick in inflation as a result of higher excise tax on oil products will bring the average inflation rate to 3.3 percent.

"This is still low and sustainable," he said.

Chua said the first package of the DOF's Comprehensive Tax Reform Program (CTRP), which was submitted to Congress in September 2016, has considered sectors that will be affected by the oil excise tax increase, such as drivers of public utility vehicles, areas being serviced by small power utility groups (SPUG) or areas that are not yet connected to the main power grid due to their location.

SPUG areas, which are the missionary areas of the National Power Corp. (Napocor), are serviced by providers that use diesel-powered electricity sources.

Chua said that since SPUG areas have subsidized rates, they will not be affected that much. He however assured lawmakers that the DOF continues to coordinate with all stakeholders to ensure that the impact of the proposed tax hikes will result in net gains for the poor and the government. (PNA)

Source: Philippines News Agency