Higher excise tax on fuel to further burden poor – Quimbo

Sofia Tomacruz, Aika Rey

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Higher excise tax on fuel to further burden poor – Quimbo
A P3-increase in diesel prices may lead to a P0.52-increase in minimum fare in jeepneys mostly used by wage earners

MANILA, Philippines – Deputy Speaker Romero “Miro” Quimbo reiterated  on Wednesday, May 17, that the proposed increase in excise taxes on fuel would only further burden the poor, as it would lead to higher public transportation fares.

“Now, the (government) will tax everything including diesel and kerosene….I’m pretty certain that the poor are going to pay for that,” Quimbo said in a mix of English and Filipino at a tax forum held in the Ateneo Graduate School of Business on Wednesday.

Quimbo, who pushed for other tax reform measures at the forum, said that a P3-increase in diesel prices may lead to a P0.52-increase in minimum fare in jeepneys mostly used by wage earners.

The proposed increase in excise taxes is meant to counter revenue losses from the administration’s proposed comprehensive tax reform program (CTRP). (READ: Duterte’s tax reform: More take-home pay, higher fuel and auto taxes)

Quimbo said that he has always fought for tax reform but he has reservations with the “anti-poor” provisions. He said that if the proposed increase in excise taxes is not carefully targetted, it is going to make “the poor poorer and the rich richer.” (READ: #AskTheTaxWhiz: Is the proposed tax reform package really pro-poor?)

“That is what I essentially feel if we are not able to temper the current tax reform package as being presented,” he added.

Quimbo aired his concern on the same day that the Social Weather Stations (SWS) released the results of its nationwide survey on Filipinos’ optimism about their quality of life and the economy, held in late March.

The survey results show that poor Filipinos are the least optimistic about their prospects and a better economy in the next 12 months. Malacañang attributed this to the “pinch of inflation” due to higher electricity cost and prices of gasoline, diesel, kerosene, and LPG in the first quarter of the year.


Quimbo said the House is set to pass the proposed CTRP  on second reading on May 29, before Congress goes on break.

He said that unlike other measures, the proposed CTRP is “more complicated” because it is made up of various tax proposals.

“It’s a little bit more complicated. It cannot just be passed, simply because (income) tax reform is being tied to new taxes,” he said.

The Department of Finance’s first package in the CTRP includes the lowering of income tax rates, broadening of the value added tax (VAT) base, and higher fuel and automobile excise tax rates

Meanwhile, big business groups and individuals have long clamored for tax reform measures, as the Philippines has one of the most complicated tax systems in the world. (READ: FAST FACTS: Time to pay taxes, what should you know?)

Individuals pay taxes a total of 28 times a year in the Philippines, which also has the 2nd highest income tax rate in Southeast Asia.

“It really is about time that they made those changes in our tax system. It really is antiquated and we hope to move towards a fair, simpler, and more efficient tax system,” said Malou Lim, president of the Tax Management Association of the Philippines.

Lim noted that focus should also be given to measures to offset the anticipated revenue losses. “Yes, we want to reduce the income tax right now, but what would be the compensating measures? We need to look into it more carefully. There needs to be money to fund all the (government) projects,” she said.

‘Perfect time’

Quimbo also said now is the perfect time for the proposed tax reforms to be passed, citing the high popularity of President Rodrigo Duterte.

“The timing is perfect because as we have suggested, tax reform (should be addressed) at the start of the President’s (term) while popularity is still high and effects can be seen before stepping down,” he said.

Meanwhile, the lawmaker wondered aloud whether the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) can improve their collection.

Quimbo cited the collection of excise taxes on fuel as an example: “While the economy is growing and consumption on fuel is increasing, collection actually went down.”

BIR spokesperson Marissa Cabreros responded: “The collection is dependent on our manpower….We will be able to deliver the P1.829 trillion [target] this year if we hire more professionals and personnel to man the BIR.” – Rappler.com

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Sofia Tomacruz

Sofia Tomacruz covers defense and foreign affairs. Follow her on Twitter via @sofiatomacruz.
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Aika Rey

Aika Rey is a business reporter for Rappler. She covered the Senate of the Philippines before fully diving into numbers and companies. Got tips? Find her on Twitter at @reyaika or shoot her an email at aika.rey@rappler.com.