By Pearl Gumapos
The Department of Finance (DOF) on Tuesday night (March 15) said that excise tax can no longer be suspended since it’s already a part of the 2022 national budget.
This is after several proposals to suspend the imposition of excise taxes on petroleum products.
“If we cut this tax, this tax of P147 billion that we estimate we will collect in 2022, has already been put in the budget and has already been allocated for different expenditures,” DOF Sec. Carlos Dominguez said during the Talk to the People.
“If we suspend this and do not collect it, what will happen is our debt to GDP ratio will go up from the estimated 7.7% to 8.2%. It will mean that if we continue to spend the same amount of money, we will have to borrow more money,” he said.
Dominguez suggested instead that subsidies be provided for those who need them.
“ What we should do instead is to provide targeted relief to the most vulnerable sectors of our society. Our recommendation is to use this extra tax money to subsidize the poorer people in our society,” he said.
According to Dominguez, the agency has analyzed the situation and came to the conclusion that whatever they recommend will be good for the country, especially for the people in need of assistance.
There are two taxes that are imposed on fuel, Dominguez explained.
“The first is an excise tax, a tax on the fuel withdrawn from the depot. That is a tax on the volume. It is not related to the value of the tax. We also imposed a tax of VAT, value-added tax, a tax on anything you buy,” he said.
Dominguez added that the reason the excise tax was increased in 2017 was to fund the Build, Build, Build program and the 10-Point Economic program of the government.
“We estimated that if we suspend the fuel excise taxes under TRAIN, it will reduce the total government revenue by P105.9 billion in 2022,” he said. -rir
