Cash subsidy eyed vs excise tax

May 17 2017 8:43 PM

House of Representative session | image from PTV
House of Representative session | image from PTV

The government is eyeing cash subsidy to the country’s poorest families who are expected to bear the burden of higher prices of commodities and fuel when the proposed excise tax on petroleum products is implemented, a lawmaker said on Wednesday, May 17.

Quirino Representative Dakila Cua, chairman of the House ways and means committee, said a social benefit card will be in place for the poorest families, who will receive at least P3,000 per year in benefits for every household in the next three years.

The government targets to collect around P205 billion from a new tax package that promises lower personal income taxes, but at the same time increases the price of fuel and other commodities.

Cua said the proposed Comprehensive Tax Reform Package (CTRP) will be the “crown jewel of the economic reform agenda” of the Duterte administration when implemented.

Cua and Albay Rep. Joey Salceda, one of the authors of the bill, led the presentation of the tax package in a caucus of the majority bloc on Wednesday. Cua said the most contentious points raised were the excise tax on fuel products and the lifting of the tax exemptions on cooperatives.

Executive Secretary Salvador Medialdea and House leaders led by Speaker Pantaleon Alvarez and Majoority Leader Rodolfo Farinas were also at the caucus.

Farinas said they target to bring the bill to plenary for debates next week and pass it on third and final reading on May 31 or the sine die adjournment. The measure is targeted to be implemented starting 2018.

Salceda described the CTRP as “the most radical in the history of the country since 1946, and is very well studied, very comprehensive, most finely-balanced tax measure ever since World War 2.”

“Kinukuha sa top 1 percent at binibigay sa lowest 50 percent at sa middle 40 percent. It’s egalitarian, why, kasi sa Pilipinas, naka-concentrate and income and wealth sa top 1 percent, so sila nakakalusot dahil nga natatakot tayong buwisan ang mahihirap,” Salceda said.

“Ang ginawa natin, bubuwisan natin pero ibabalik natin iyong sobra-sobra sa mahihirap, pero hindi natin ibabalik iyong para kina Ayala at Henry Sy,” he added.

Salceda, a top economist, also said that the “collateral benefit” of the new tax measure could come in the form of credit ratings upgrade, which would result to lower interest rates and more fiscal space for expenditures such as social services and infrastructure.

The net revenue of P204.8 billion would come mainly from the excise tax on fuel products, which would result to a P3 per liter increase on the first year of implementation; another P2 per liter on the second year; and another P1 on the third year.

The excise tax on fuel is expected to generate a revenue of P75 billion in 2018; P120 billion in 2019; and, P150 billion in 2020. From this amounts, 40 percent would be allotted for the social benefit card, Cua said.

The beneficiaries could be the same as those receiving the current conditional cash transfer, Cua added.

The other sources of revenues from the CTRP, aside from the excise tax, are the tax on sweetened products (P47 billion); increased excise tax on automobiles (P36 billion); and lifting of value added tax exemption on several items and services (around P90 billion).

The foregone revenues from the lower personal income tax is estimated at P140 billion, Cua said.