BAYAN Muna Rep. Carlos Isagani Zarate is appealing to the Department of Finance (DoF) to reconsider its plan to increase the excise tax on oil and other petroleum products.
Citing a study by Ibon Foundation, Zarate expressed strong opposition to the proposed increase in excise tax of P6 to P10 on the prices of petroleum products.
According to Zarate, the petroleum excise tax is a fixed peso amount levied on every liter of particular petroleum products and, therefore, indexing this to inflation means that the tax will be periodically adjusted higher which means a perpetually growing tax on petroleum products and corresponding higher prices.
“The excise tax would not just affect fuels with direct effects on consumers such as diesel, LPG and kerosene. Items like bunker oil and asphalt are currently not levied an excise tax but would now be included,” Zarate said.
At present, there are excise taxes of up to P4.50 per liter or kilogram on oil products like gasoline, aviation fuel, lubricating grease and oils, naptha, and others.
The DoF said that it wants to impose a tax of P6 per liter on diesel, among others, which is commonly used by public utility vehicles and by trucks transporting goods, as well as on LPG and kerosene which are directly consumed by poor households.
It may also raise existing excise taxes to up to P10 per liter or kilogram.
“We agree with IBON that the higher excise tax on oil products will raise P178.2 billion in revenues but these billions are ultimately taken from consumers’ pockets when they buy oil products directly or when these are passed on as higher prices of goods, services and transport fares,” Zarate said.
The DoF’s plan of adjusting the excise tax is part of the proposed Comprehensive Tax Reform Program of the Duterte administration.
The DoF said the government would raise P101 billion in additional revenue if the current excise tax on fuels is raised to P10 per liter of gasoline and P6 per liter of diesel products.
No upward adjustments in excise tax rates have been made since 1997 and the rates have been fixed in nominal terms, reduced or eliminated.
The Finance Department said a P10-per-liter proposed tax rate was derived by indexing the existing excise tax rate of gasoline (P4.35/liter) to cumulative inflation factor of 2.37 (1997-2014). The same formula was used for the proposed P5.96 tax rate on diesel.