Suspending the imposition of excise and value added taxed (VAT) on fuel will translate to revenue losses of P147.1 billion, or around 0.7 percent of gross domestic product in 2022, according to the Department of Finance (DOF).
The DOF said in its presentation to the House of Representatives committee hearing yesterday it does not support the proposed suspension of the excise taxes and VAT on fuel because it translates to significant foregone revenues.
The DOF said the country will lose the improvements made in making the tax system more equitable under the Tax Reform for Acceleration and Inclusion Law.
“The unrealized public spending and investments from the foregone revenues will be detrimental to our economic recovery and long-term growth,” the DOF said.
“The government committed to support our transportation sector amidst the increasing oil prices, so the suspension of the fuel excise may no longer be necessary,” it added.
The DOF also estimates that over a 10-year period, the average revenue impact of the said suspension is P228.5 billion annually.
The Development Budget Coordination Committee said government will release P1 billion to the Land Transportation Franchising and Regulatory Board to provide cash grants to around 178,000 bonafide public utility vehicle drivers for the remaining months of the year. – Angela Celis
