Rise in oil prices should not be blamed on excise tax alone — DOF

Chua explained that oil excise tax reform “must be seen as part of the overall package” which includes the reduction of personal income tax. (PNA PHOTO)

MANILA, Aug. 10— The Department of Finance (DOF) on Thursday defended anew the inclusion of oil excise tax in the Duterte administration’s tax reform program saying it was not the sole factor to blame for the rise in oil prices.

“Factors such as weather, stocking, income, lower poverty, basic supply and demand and even profiteering are the many factors that affect the final price and should not be blamed on tax alone,” DOF Undersecretary Karl Kendrick Chua told the Senate Committee on Ways and Means during its 13th hearing on the tax program.

“There are many factors that affect prices. An increase in oil price does not necessarily lead to higher prices or inflation,” he added.

Chua explained that oil excise tax reform “must be seen as part of the overall package” which includes the reduction of personal income tax.

He further said that contrary to public opinion, the reform “is really very equitable, pro-environment and pro-health.”

The taxman claimed that higher oil excise will eventually also help reduce pollution and congestion, which he said were two factors that really waste time and health.

Moreover, he assured a few tax exceptions will protect the poor.

It may be recalled that President Duterte, during his second State of the Nation Address, urged the Senate to pass his proposed comprehensive tax reform package “in full”.

Senators previously expressed their doubts to pass their version of the package citing several concerns such as the effect of petroleum taxes and excise taxes on poor sectors.

However, Senate Minority Leader Franklin Drilon last week revealed that the President has accepted that “flexibility” is needed on the part of the executive to ensure the passage of the proposed tax package.

Drilon stressed that the President “left it to the good judgment” of the legislature and consultation with the Department of Finance (DOF) as to what is the appropriate tax structure can be passed.

“He (the President) realizes that the Senate as a collegial body will have to seek the views of each senator. He was open to amendments,” he added.

The House of Representatives has already approved the first package with 246 votes that are in favor, nine that are against it, and one abstention last May 31.

The tax-reform package seeks to lower personal income tax rates, expand the value-added tax (VAT) base, raise excise taxes on petroleum and automobiles, impose an excise tax on sugar sweetened beverages and ease the rates of estate and donor’s taxes.