Govt vows to shield poor from higher excise tax

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THE DUTERTE administration is putting in place highly targeted transfer programs for the poor and low-income households to be affected by proposed adjustments in excise fuel taxes, the government’s economic managers said on Monday.

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In a joint position paper, Finance Secretary Carlos Dominguez 3rd, Budget and Management Secretary Benjamin Diokno, and Socioeconomic Secretary Ernesto Pernia said these “highly targeted transfer programs” would help cushion the impact of the proposed indexing to inflation of the excise taxes on oil products on “the poorest 50 percent of the population.”

Adjusting oil excise taxes on diesel, gasoline and other petroleum products is among the proposals under the first tax reform package submitted by the Duterte administration to Congress, which also includes the plan to lower personal income tax (PIT) rates, expand the value-added tax (VAT) base, and restructure the excise tax on automobiles, except for trucks, cargo vans, jeepneys, jeep substitutes, single chassis engines and special purpose vehicles.

“To mitigate the impact of higher oil prices on low income and vulnerable households, we will use highly targeted transfer programs to ensure that the poorest 50 percent of the population is fully protected from the increase in oil excises, while the next 30 percent, which covers the commuting class, will be protected through indirect subsidies to public utility vehicles,” the economic managers said.

“Only when tax reform and targeted transfers are pursued together can we ensure that the resulting policy reform will be truly inclusive and equitable,” they said.

Increasing the excise on oil products is highly progressive as the top 2 million households, which comprise 10 percent of the total number of households in the country, consume almost 60 percent of oil products, the Cabinet officials noted.

The top 200,000 households or 1 percent of the total, consume some 20 percent of the oil products, they added.

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