‘Tax firms to offset losses from oil levy’

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The revenue losses that could emanate from the proposed suspension of oil excise taxes can be easily offset by corporate income taxes, according to Ibon Foundation Inc.

Ibon said corporate income taxes, especially if the tax cuts under the  Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) were suspended, can generate additional revenues for the government.

The group said suspending the fuel excise taxes would provide a much-needed reprieve for Filipino households, especially Jeepney drivers, who have adversely been affected by rising oil prices.

“These immediate measures are doable and will help lower domestic oil prices and ease inflationary pressures, substantially mitigating the burden of global oil price hikes on the poorest. Longer-term solutions should also start to be seriously considered,” Ibon said.

Ibon said from August 23 to October 15, the price per barrel of Dubai crude increased by $15.95, Mean of Platts Singapore (MOPS) gasoline by $19.05, and MOPS diesel by $22.65.

This has translated to eight consecutive weeks of price hikes in the country. Ibon said during this time, the price per liter of diesel increased by P8.70, gasoline by P7.25, and kerosene by P8.10.

This means, Ibon said, jeepney drivers have to pay P95.70 more for 11 liters of diesel per day. Farmers have to pay P1,653 more for 190 liters of diesel per hectare per cropping season.

“Rising oil prices increases the prices of basic goods and services and fuels inflation. This is worst for the poorest 30 percent of the population for whom inflation is higher than the national average,” Ibon said.

The national government stands to lose P131.4 billion next year if fuel excise taxes are suspended in response to rising oil prices, according to the Department of Finance.

In a memorandum to Finance Secretary Carlos G. Dominguez, DOF Revenue Operations Group Undersecretary Antonette C. Tionko said the only way to suspend the fuel excise taxes under the TRAIN law is through legislation.

Tionko added that the “substantial revenue loss” could affect the government’s Covid-19 recovery measures for next year.

Based on the estimates, Tionko said the bulk of the total foregone revenues if excise taxes are suspended will comprise incremental excise revenues under the TRAIN Law which amounts to P106.7 billion. The remaining P24.7 billion will be derived from baseline excise revenues.

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