MANILA, Philippines – In lieu of suspending excise tax amid rising fuel prices, President Rodrigo Duterte has approved the proposal of the Department of Finance (DOF) to provide a monthly subsidy of P200 per household for poor families.
During the Talk to the People address aired on Wednesday, March 16, Finance Secretary Carlos Dominguez III proposed to provide additional aid through unconditional cash transfers to the bottom 50% of all Filipino households, amounting to P200 per month per household for a year. Dominguez said around 12 million households will benefit, totaling to P33.1 billion in budgetary requirements.
“Mr. President, we realize that this is not enough, but this is what we can afford as of this time,” he said.
“Sige, ’yun ang policy ng executive department (Alright, that is the policy of the executive department),” President Rodrigo Duterte said in response to the recommendation.
During a press briefing on the same day, Presidential Spokesperson Martin Andanar confirmed that this meant Duterte approved the proposal.
“Kung kailan po ito maibibigay, hintayin muna natin lumabas ang guidelines po ng Department of Budget and Management (As to when this will be distributed, let’s wait for the guidelines to be released by the Department of Budget and Management),” Andanar said.
Dominguez said that if the government suspends fuel excise taxes, the total government revenue in 2022 will be reduced by P105.9 billion. He said this was equal to 0.5% of the GDP.
He added that P147.1 billion from fuel excise tax and VAT were expected to be collected in 2022, and have already been allocated for expenditures, including those for the Build, Build, Build program and salaries of government employees including soldiers, policemen, and teachers.
“That money has already been allocated, and if we suspend this and we don’t collect it, what will happen is our [deficit-to-GDP] ratio will go up from an estimated 7.7% to 8.2%. And it will mean that if we will continue to spend the same amount of money, we will have to borrow more money,” Dominguez said.
If excise tax is suspended, the cost of fuel would be reduced by P10, but Dominguez said that the top 10% of income earners consume almost 50% of all the fuel.
“Cutting the tax will benefit more the people who have cars and they are the richer people. We will not be benefitting so much the bottom 50% of our population,” he said.
Dominguez thus recommended “targeted relief” to the most vulnerable sectors, to be funded by higher VAT taxes brought about by higher fuel prices.
“We think the average price might be around $110 per barrel for the year, therefore we will have additional P26 billion to distribute directly,” Dominguez said.
Senator Grace Poe remarked that this subsidy was a pittance.
“At P6.66 per day, it can’t even get one a jeepney ride to the minimum distance,” she said in a statement.
She hoped that the government would still give serious thought to proposals to suspend fuel tax, or increase the P200 monthly subsidy “which is not enough to see our people through these hard times.”