DOF Sec Dominguez Recommends Marcos Admin to Maintain Oil Taxes

The Department of Finance Secretary, Carlo Dominguez has advised the incoming President Marcos Jr. to keep the oil taxes despite calls for tax suspension of oil under the TRAIN law. The huge increase in oil prices is brought about by the Ukraine – Russia war. 

Secretary Dominguez has said that “the better and more equitable way to address the impact of the increasing fuel prices is to provide swift and targeted support to the vulnerable sectors. A suspension will reduce government revenues by P105.9 billion or 0.5 percent of gross domestic product (GDP) in 2022, resulting in a higher deficit and debt for the government,”

He also goes on to say that “an increase in deficit and debt, in turn, will potentially raise interest rates on government debt, thereby reducing much-needed fiscal space for funding crucial social and economic programs, more so now when the government needs to sustain and even boost the domestic economy’s recovery from the lingering pandemic and Russia-Ukraine conflict,”

“The suspension of the imposition of excise taxes on petroleum is also extremely regressive and primarily benefits higher-income households. We will just be subsidizing the top 10 percent of Filipino households who consume about 50 percent of total fuel in 2022. This means that the larger financial benefits of the suspension will not go to the poor, but to higher-income households,” according to Secretary Dominguez. 

Retired Undersecretary and DOF Chief Economist, Gil Beltran has said that outgoing President Duterte has approved dole-outs during the pandemic. Beltran also said that the Philippines’ debt would have risen to ₱15.4 trillion if oil taxes were suspended.

Source: Inquirer