Oil excise tax hike to offset income tax cut | Inquirer News

Oil excise tax hike to offset income tax cut

By: - Reporter / @bendeveraINQ
/ 03:12 AM September 14, 2016

A vehicle’s tank is filled with gas at a station in Quezon City.INQUIRER FILE OHOTO/ALEXIS CORPUZ

A vehicle’s tank is filled with gas at a station in Quezon City.    INQUIRER FILE OHOTO/ALEXIS CORPUZ

THE DUTERTE administration sees raising the oil excise tax as the best way to raise revenue after it lowers the personal income tax rates, Finance Secretary Carlos G. Dominguez said on Tuesday.

“[Hiking] fuel taxes is the most reasonable [option] to take. Fuel prices are at historic low levels and not rising. Prices last week dropped $10 per barrel,” Dominguez told the House ways and means committee hearing the administration’s proposed tax policy reform program to be submitted to Congress this month.


The proposal to raise the oil excise tax is part of the first tax reform policy package targeted for passage next year.


The package will adjust personal income tax rates to correct so-called income creep; reduce the maximum personal tax rate over time to 25 percent from the current 32 percent except for the highest income earners, and shift to a simpler modified gross system.

To compensate for the foregone revenue estimated at P139 billion from the lower personal income tax rates, the administration plans to expand the value-added tax (VAT) base by limiting exemptions to raw food and other essentials such as education and health; increase the excise tax on petroleum products and index this to inflation; levy a P5 per kilo tax on sugary products; relax bank secrecy in fraud cases, and include tax evasion as a predicate crime to money laundering.

In terms of revenue impact, the first package would result in a net gain of P220.7 billion. By 2022, revenue gains from higher oil excise taxes is seen to almost double to P249 billion.

Officials of the Department of Finance had said the government stands to collect P130.51 billion more in 2017; P158.76 billion in 2018, and P249 billion in 2022 from the higher levy on fuel products.

The excise tax adjustment would entail, in the case of regular gasoline, raising the levy from the current P4.35 per liter to P10 per liter next year, P10.40 per liter in 2018, and P12.17 by 2022.

For diesel, from zero at present, an excise tax of P6 per liter would be slapped next year, P6.24 in 2018, until it reaches P7.30 by 2022.

Your subscription could not be saved. Please try again.
Your subscription has been successful.

Subscribe to our daily newsletter

By providing an email address. I agree to the Terms of Use and acknowledge that I have read the Privacy Policy.

TAGS: Business, News, Oil, Taxes

© Copyright 1997-2024 INQUIRER.net | All Rights Reserved

We use cookies to ensure you get the best experience on our website. By continuing, you are agreeing to our use of cookies. To find out more, please click this link.