DAVAO CITY — President Rodrigo Duterte has approved the recommendations of the finance department to support poor households in response to the rising fuel prices, the Palace announced on Wednesday.
The recommendations include the retention of the fuel excise taxes and the grant of P200-per-month cash aid to the bottom 50 percent of Filipino households, acting presidential spokesman Martin Andanar said.
During President Duterte’s Talk to the People aired on Wednesday, Finance Secretary Carlos Dominguez III said that retaining fuel excise tax collection will benefit at least 12 million individuals from low-income households in the country.
Apart from the poor sector, the excise tax on fuel imposed under Tax Reform for Acceleration and Inclusion (TRAIN) Law will also provide the budget for the salaries of state workers and help fund infrastructure developments in the country, Dominguez pointed out.
Tax collections from fuel will provide the budget for target subsidies of 200 per month per household from the lower 50 percent of the Filipino population or roughly 12 million individuals, amounting to 33.1 billion per year, he noted.
The finance chief also refuted claims that suspending the collection of fuel excise tax will help soften the blow of the oil price hike, saying that this will instead cause more harm than good if it causes the Philippines’ debt-to-gross domestic product (GDP) ratio to increase.
“If we suspend this, and we don’t collect it, what will happen is our debt-to-GDP ratio will go up from an estimated 7.7 percent to 8.2 percent. And it will mean that if we — if we will continue to spend the same amount of money, we will have to borrow more money and the amount of — and that will bring up our debt-to-GDP ratio by — to about 61.4 percent,” he said.
If the tax on fuel is reduced, it will only benefit the top 10 percent of income earners in the Philippines, which consume almost 50 percent of all the fuel.
“In other words, if we — and if we look at the top-bottom 50 percent of the Philippines, they only consume 13 percent of the fuel,” he argued.
Continuing the collection excise tax on fuel will therefore soften the blow for all sectors, making the measure “very equitable” for all Filipinos and not the country’s top earners and car owners, said Dominguez.
Meanwhile, National Economic and Development Authority (NEDA) Director-General and Socioeconomic Planning Secretary Karl Kendrick Chua who was also present in the meeting, said he agrees with the finance department’s recommendations, noting NEDA is closely monitoring inflation in the country to minimize its massive impact on the whole population.
In his report to President Duterte, Secretary Chua recommended three measures to curb the effects of inflation: providing targeted relief to vulnerable sectors, doing unconditional cash transfer, and promoting energy conservation through the implementation of a 10-hour, four-day workweek.
Shortening the regular workweek to just four days would reduce work commute and help the government manage the economy, according to the NEDA director-general.
A similar measure was also implemented in 2008 in a bid to cushion the impact of rising fuel prices, he added.
Under NEDA’s proposal, public utility vehicle (PUV) drivers will receive a service contracting subsidy of at least P6,500 per month for two months.
