President Duterte has approved the recommendation to retain the fuel excise tax under the Tax Reform for Acceleration and Inclusion (TRAIN) Law amid the continuing increase of oil and petroleum products prices, Malacañang announced.
Communications Secretary Martin Andanar made this announcement amid calls to suspend the excise tax to lower the price of oil in the country.
In his press briefing on Wednesday, March 16, Andanar said the first recommendation of the Department of Finance (DOF) that the President approved was to retain the fuel excise tax imposed under TRAIN Law because it was already budgeted for the salaries of government personnel, including school teachers, and the Build, Build, Build infrastructure program.
The second approved recommendation was to provide targeted subsidies of P200 per month per household for one year to the bottom 50 percent of the Filipino families, amounting to P33.1 billion in budgetary requirements.
During the latest episode of Talk to the People on Wednesday morning, President Duterte said that the Department of Finance (DOF) recommendations would be the Executive Department's policy.
In the same pre-recorded public address, Dominguez said this was the best the government could do for now.
"This is something that we can sustain, and this is something that we can afford as of this time," he said.
Dominguez said suspending the fuel excise tax under TRAIN would reduce government revenue by P105.9 billion in 2022.
"We expected to collect a total of P147.1 billion in fuel excise tax and VAT in 2022... This tax of P147 billion... has already been put in the budget and has already been allocated for different expenditures. Those expenditures are for our Build, Build, Build, for the salaries of government employees including soldiers, including policemen, including teachers," he said.
"If we suspend this, and we don't collect it, what will happen is our debt-to-GDP (gross domestic product) ratio will go up from an estimated 7.7 percent to 8.2 percent. If we continue to spend the same amount of money, we will have to borrow more money, and that will bring up our debt-to-GDP ratio to about 61.4 percent," he added.
Dominguez likewise said that cutting the excise tax would also not benefit the ordinary Filipino, noting that the bottom 50 percent of the Philippines only consume 13 percent of the fuel.
"So cutting the tax will benefit more the people who have cars and the other richer people. We will not be benefitting so much the bottom 50 percent of our population, which will make it very inequitable," he said.
Dominguez said retaining the taxes would mean the government could collect an extra P31.8 billion that can be used to help the poor Filipinos.
"This is the extra money that we have not yet allocated. So our recommendation is to use this extra tax money to subsidize the poorer sections, the poorer people in our society," he said.
"We propose to provide additional relief through unconditional cash transfer to the poorest 50 percent of our population. We propose that we will give them an additional P200 per month or P2,400 per year for each household," he added.
In his briefing, Andanar said the Department of Budget and Management (DBM) would release the guidelines on the distribution of cash aid.
"Kung kailan ito ibibigay, hintayin muna natin lumabas ang guidelines ng DBM (Let's wait for the DBM to release the guidelines to find out when this will be given)," he said.
"Nakasulat naman sa budget circular sa DSWD (Department of Social Welfare and Development (DWD) o LGU (local government unit) ang mangangasiwa. Kung DSWD, meron silang masterlist sa ginamit nilang SAP distribution (It's in the budget circular that the DSWD or LGU are the ones to supervise it. If it's the DSWD, they already have a masterlist from the SAP distribution)," he added.