Oil tax hike revenue to be used to help the poor

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Nearly half of expected revenues next year from a proposed increase in oil taxes will be used for cash transfers and other social mitigation measures, a Finance official said.

In a statement on Friday, Finance Undersecretary Karl Kendrick Chua said that if the proposed Tax Reform for Acceleration and Inclusion Act (Train) was passed by Congress, almost P30 billion would be allocated for targeted subsidies given an expected short-term rise in prices.

Under House Bill 5636 or the version of the Train approved by the House of Representatives, additional revenues from adjustments to oil excise taxes are expected to reach P74.4 billion in 2018 — the first year of the law’s implementation.

Chua said a key component of the social benefits program would be targeted cash transfers (TCT), where the poorest 10 million households will be given bi-annual subsidies to shield them from the impact of revenue-enhancing measures under the proposed law.

Each household qualified to receive the TCT will get P1,200 in the first quarter of the year and another P1,200 in May before the beginning of the school year.

“This is the biggest social mitigating measure under the tax reform,” Chua said.

He explained that “the amount of cash transfer was calculated to fully offset the moderate but temporary increase in prices faced by the average household in the bottom 50 percent.”

Besides the TCT, the government will also implement the Pantawid Pasada — a social assistance project for commuters and jeepney drivers – and a jeepney modernization program to ease the impact of higher oil taxes, and Pantawid Kuryente to help small power consumers in missionary electrification areas.

A national ID, which will also serve as a social welfare card, will help identify TCT beneficiaries and diminish leakages in the program.

Chua said the TCT program would build on the success of conditional cash transfer (CCT) initiatives of the previous administration and the National Household Targeting System for Poverty Reduction or the Listahanan, an information system that identifies the poorest households and their locations.

“Under the Listahanan, some 4.4 million households are currently CCT beneficiary-families. This means they can simply be provided a cash top-up similar to the rice top-up now being given to existing beneficiaries,” he said.

The remaining 5.6 million poorest households can be identified by tapping the Department of the Interior and Local Government, local government units and Philhealth, which is targeting to register and issue identification cards to an additional 7.9 million non-CCT families this year.

“As in the past, the Land Bank [of the Philippines]will lead the cash distribution of the TCTs either through cash cards or authorized conduits,” Chua said.

For the new 5.6 million TCT beneficiary-households, initial estimates show that 1.8 million living in urban areas will receive the grants through cash cards while the remaining 3.8 million living in rural areas will get theirs from conduits.

“The Land Bank and the Department of Social Welfare and Development have substantial experience in the CCT program and can build on these to improve the TCT program,” Chua said.

The balance of incremental revenues from oil excises amounting to some 60 percent, he said, will fund infrastructure, education, health, housing and social protection projects.

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