Monday , June 25, 2018

No reason to hike fares due to tax reform law, says Finance chief

THERE is no reason for a fare increase, despite the higher excise tax on petroleum products under the Tax Reform for Acceleration and Inclusion (Train) Act, Finance Secretary Carlos Dominguez III said on Monday, January 8.

"At this point in time, since the fuel did not go up, I don't see any reason to have a fare hike because of (excise tax on) fuel," Dominguez told Palace reporters.

Jeepney groups want the minimum fare for jeepneys increased to P12 while taxi operators are seeking a P50 flagdown rate from the current P40 to offset potential losses following the excise tax adjustments on oil products.

Under the Train Law, there will be a staggered increase in excise tax on fuel.

There will be an additional P2.50 excise tax on diesel per liter in 2018; P4.50 in 2019; and P6 in 2020 onwards. On the other hand, excise tax on gasoline per liter will be P7 in 2018; P9 in 2019; and P10 in 2020 onwards.

Dominguez, however, explained that main purpose of the first tax reform package pushed by the Duterte administration "is to reduce poverty and inequality, and not because of deficit or debt reduction."

"Train (Law) is the first step to once and for all, correct our unfair, complex and inefficient tax system," he said.

While the Finance chief admitted that there would be "moderate" increases in the prices of basic commodities because of the higher oil excise tax, he said these would be "manageable."

Dominguez likewise assured that the government, through the Department of Social Welfare and Development (DSWD), would provide the "poorest" 10 million households some cash transfers, amounting to P2,400 in 2018 and P3,600 in 2019 and 2020, as a mitigating measure against the increased excise tax on petroleum products.

"Our analysis shows that the overall inflation might be increased by seven-tenths of one percent due to higher oil prices in 2018, of which food prices may increase by up to three-tenths of one percent and transportation will be up probably one-tenth of one percent. This is rather manageable, especially when compared to the savings from the lower personal income tax," Dominguez said.

"To protect the poor and vulnerable from the impact of this moderate increases in prices due to the increase in oil excise, the DSWD is mandated to provide a targeted cash transfer to the poorest 10 million households in the amount of P2,400 per year in 2018, P3, 600 per year in 2019 and 2020. This will be implemented in the first quarter of 2018," he added. (SunStar Philippines)