The government plans to implement a transport subsidy program for poor Filipinos to compensate for higher excise taxes that will be imposed on fuel products, the Finance Department said Monday.
The Finance Department said it was closely coordinating with the Transportation and Energy departments to find ways on how to best deliver indirect subsidies to low-income commuters to soften the impact of the planned increase in fuel excise taxes.
Finance assistant secretary Paola Alvarez said the social protection measures might involve the issuance of Pantawid Pasada or cash cards to drivers and operators of public utility vehicles, setting up fuel depots with subsidized rates for PUVs or giving them cash discounts.
“For public utility vehicles, we are now linking up with the DOTr and the DOE to come up with measures to best implement the cash cards or oil subsidy program, to lessen the impact of the planned fuel excise tax on PUVs,” said Alvarez.
Alvarez said the first package of the tax reform plan, which would include the fuel excise increases, would be implemented in 2018, giving the DOF and other government agencies a full year to devise ways on how to deliver the indirect subsidies to low-income commuters and other vulnerable sectors who would be affected by the tax hike.
She said the main feature of the first tax reform package submitted by DOF to Congress in September was the reduction of the personal income tax rate from 32 percent to 25 percent that would in effect exempt 4.7 million taxpayers, including 1.7 million minimum wage earners, from paying income taxes.
An additional 3 million taxpayers with taxable incomes of P250,000 and below would be included in the batch that would pay zero taxes under the tax plan.
Alvarez said to offset the revenue erosion from the PIT reductions, the plan would be complemented by a set of revenue-enhancing measures such as adjusting the excise tax on petroleum products and indexing these to inflation.
Other revenue measures would include expanding the value-added tax base and restructuring taxes on automobiles, except for buses, trucks, cargo vans, jeepneys, jeep substitutes, single cab chassis and special-purpose vehicles.
Alvarez said while there were observations that the tax plan appeared too “ambitious”, the government was intent on making hard-to-make decisions to ensure that growth truly was inclusive under the Duterte watch.
“It is ambitious in a way that our president is very ambitious also in helping the country. I think he is the only president who actually wants to overhaul and improve our transportation system, wants to bring about inclusive growth and wants the country’s rural areas developed,” Alvarez said.
She said the Duterte administration’s goal was to make the benefits of growth reach every Filipino by developing the country’s infrastructure, investing heavily in human capital development and providing social protection for the poorest of the poor.
Alvarez said the tax reform plan submitted by the DOF to Congress would ensure that the rich, rather than the poor, would pay more taxes.