Petro industry group head calls for new excise tax

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Increasing taxes on petroleum products would help fund tax reform and additional infrastructure projects, according to Founding Chairman and President of the Independent Philippine Petroleum Companies Association (IPPCA) Fernando Martinez.

“There is an excellent opportunity for the next administration to impose a specific tax of P3 to P5 [per liter]on all petroleum products,” Martinez said on Tuesday.

Martinez, who is also the Chairman and Chief Executive of Eastern Petroleum Corp., has publicly prodded the Aquino Administration over the last two years to implement the new tax, given that global petroleum prices have plunged by 40 percent since the end of 2014.

In his previous informal talks with top Department of Finance (DOF) officials, Martinez said the government estimated the excise tax would generate a low of P40 billion to a high of P75 billion annually in specific taxes, based on the country’s consumption of 100 million barrels a year.


He pointed out that the additional specific tax and Value-Added Tax (VAT) can bring overall petroleum taxes close to P150 billion annually, which will be welcome funds for sustaining infrastructure development and modernizing the various roads and bridges that the country badly needs.

Apart from financing infrastructure, Martinez said the tax would allow the Duterte Administration to support the tax reform agenda lowering income taxes for most earners.

He added that the significant win which incoming President Duterte garnered over his rivals gives him the moral ascendancy without fear of backlash to support a new tax.

Martinez said the proposed increase in petroleum products from P3 to P5 per liter would not be enough to justify any hike in transport fare prices.

He explained that even with the additional tax diesel prices are estimated to remain near P30 per liter and gasoline below P45 per liter. “In 2008, gasoline prices hit P60 per liter at around $100 per barrel, while diesel was at P50 per liter, which brought the fare prices to its current rate except for the voluntary rollback called for by the transport sector,” Martinez said.

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