Proposed fuel excise tax deferment to cost P131B in foregone revenues

Proposed fuel excise tax deferment to cost P131B in foregone revenues

A proposal to defer collection of fuel excise is expected to result in P131.4 billion in foregone revenues, according to the Department of Finance.

Specifically, around P106.7 billion will not be collected from the incremental excise revenues under the Tax Reform for Aceleration and Inclusion (TRAIN) law and about P24.7 billion will not be collected by the Bureau of Customs (BOC) as baseline excise revenues.

These figures were based on the projected total excise collection from petroleum products in the 2022 Budget of Expenditures and Sources of financing (BESF).

“Any suspension of the imposition of excise taxes should be appropriately studied as the revenue to be foregone is substantial and may affect the government’s budget for Covid-19 recovery measures,” Finance Undersecretary Antonette Tionko said in an Oct. 20 memorandum to Finance Secretary Carlos Dominguez III.

Energy Secretary Alfonso Cusi earlier proposed the suspension of excise taxes on fuel products given soaring domestic oil prices.

He said the government can tap the provision of the TRAIN law for this purpose, particularly the suspension of excise tax if average Dubai crude oil prices based on Mean of Platts Singapore (MOPS) rose for three months prior to the scheduled excise tax hike implementation.

Cusi also cited the need for emergency powers like what was given to the President under the Bayanihan to Heal as One Act to mitigate the upticks in fuel prices.

He, however, later said the government cannot use both measures and the only way to suspend the implementation of excise tax on fuel products is through legislative means.

Tionko confirmed that the government can not tap the safety net provision under the TRAIN law because the covered period has lapsed.

Under the TRAIN law, the said provision can only be utilized between Jan. 1, 2018 until 2020. (PNA)

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