The government is studying a plan to provide fuel subsidies to the poor to reduce the impact of higher excise tax on petroleum products, Finance Secretary Carlos Dominguez III said Monday.
Dominguez said under the plan, the higher income groups should pay more taxes than the poor.
The Finance Department recommended an increase in excise tax on fuel from the current P4.35 to P10 per liter of gasoline and P6 for diesel products.
Dominguez cited data showing that of the 20 million families in the Philippines, about 2 million families or 10 percent were consuming 60 percent of the oil.
He said 200,000 of the top income families in the Philippines were consuming 20 percent of oil supply in the country.
Dominguez said the proposed tax reform would involve granting targeted subsidies, similar to the cash allowance given to 4Ps [Pantawid Pamilyang Pilipino Program], to the people who needed support to offset the possible increase in value added tax and excise tax on oil products.
“So rather than using the VAT to support poor people, we will use targeted subsidies. So in general, for the lower income people, the result should be actually beneficial and not eroding their incomes,” he said.
“As a general rule, the rich will have to pay more in taxes while the vulnerable sectors of society will be protected through highly targeted subsidies and the conditional cash transfer program. We will ensure that ordinary workers and the bottom 50 percent of households will be fully protected through social protection programs,” Dominguez said.
Dominguez said given the proposal to increase fuel taxes, the base transportation fare would likely rise by P1.
Dominguez also the Finance Department was also conducting studies on impact of tax increase on businesses.