Tax suspension on oil products will do more harm – Diokno

Finance Secretary Benjamin Diokno. (File photo from the Senate Public Relations and Information Bureau)

MANILA, Philippines — As prices of petroleum products are expected to rise until the end of the year, although at “lower intensity,” there have been calls to suspend taxes but such a move will do more harm than good.

Finance Secretary Benjamin Diokno said this on Tuesday as the think tank Infrawatch PH called on President Ferdinand Marcos Jr. to issue an executive order that would lift the value-added tax (VAT) on oil products as pump prices rose for the 11th consecutive week.

He added the government would focus on targeted aid, rather than a blanket policy.

Reacting to this and similar calls even among lawmakers, Diokno said such proposals were “short-sighted, ill-advised and have serious consequences” on government finances and the domestic economy.

READ: Salceda suggests reducing, rather than suspending, fuel excise taxes

He pointed out that, if taxes were suspended during the fourth quarter of 2023, the government would lose an estimated P72.6 billion in revenues, equivalent to 0.3 percent of gross domestic product. This includes P41.4 billion in excise taxes and P31.2 billion in VAT.

“Any of the proposals will adversely affect our economic and fiscal recovery, our international credit ratings, and our overall debt management strategy while benefiting primarily the rich and without providing lasting inflation relief,” he said.