The House of Representatives is set to approve a measure increasing the excise tax on diesel by P6 per liter, lawmakers said on Wednesday.
This developed after House Majority Leader Rodolfo Fariñas of Ilocos Norte announced the scheduled approval next week of the Tax Reform for Acceleration and Inclusion (Train) bill which seeks to increase fuel taxes to offset the effect of the income tax exemption for those earning P250,000 a year and below.
“By noon on Monday, we’ll be asking them to submit amendments. If there will be few, then we can introduce it in the plenary. If there are a lot, then we will have a substitute bill. We will put it for second reading on Monday, Tuesday, then we’ll vote on Wednesday next week, it will be approved on third reading,” Fariñas told reporters.
“The Speaker and the Majority Leader…with them spearheading the Super Majority, it is almost 100 percent sure that it will be passed. This will be the crown jewel of the economic reform of the Duterte administration,” Rep. Dakila Cua, chairman of the House Ways and Means panel, said.
Rep. Joey Salceda of Albay, an economist and one of the authors of the Train bill, downplayed the cascading effect of higher fuel taxes not only on diesel but also on gasoline, aviation fuel, kerosene, liquefied petroleum gas, bunker fuel oil, among others.
“Oil is the commodity of the rich. The consumption of the top 1 percent of this country is equal to the consumption of the lowest 50 percent. Any effect on the lowest 50 percent will be returned to them. But for the top one percent, their payment of additional fuel taxes will go to the government for funding of infrastructure projects and other social services,” Salceda pointed out.
“Besides, there is a way to cushion, if not reverse the impact, because of the monthly subsidy which could amount to as much as P600 per month,” he added.
Salceda was referring to the P48 billion subsidy dubbed as the Social Benefits Program which will be funded through 40 percent of the expected P120 billion government revenues to be raised as a result of the Train bill. Under the Social Benefits Program, qualified beneficiaries will be provided a Social Benefit Card. Fuel vouchers will be given to qualified transport franchise holders.
“This cash transfer [from the Social Benefits Program]does not provide conditions because this will be given to cushion the effect of the measure on your family,” Salceda said. “This Social Benefits Card assistance is for the protection of the most vulnerable. This is a targeted system. If there are other sources [for the subsidy], it could happen. This bill does not limit [the government from getting from other sources]. If this Social Benefits Card becomes successful, then it could be expanded,” Cua said.
This government subsidy, however, is only good for three years since the increased fuel taxes will be staggered in three years.
“After three years, the fixed income earners would have already been unburdened. Imagine, if you are married and each of you earns P250,000 a year, your household is going to have P500,000 worth of non taxable income. They can already send their children to better schools and invest for their future,” Cua said.
“This will upgrade our credit rating, lower interest rates, give us more fiscal space. This may be radical, but it is well studied,” Salceda said.