Tax expert backs calls to lower fuel excise tax

CEBU, Philippines — The government may have to consider suspending the high excise tax on fuel, a tax expert says, pointing out its impact on rising consumer prices has become more evident.

Raymond Abrea, president of tax consulting firm Asian Consulting Group, said he supports the call to suspend the high fuel excise tax the government started imposing early this year under the Tax Reform for Acceleration and Inclusion (TRAIN) law.

Given the direct and indirect inflationary impact of excise tax, we reminded government to focus on improving or modernizing tax administration to increase revenue collections (instead of) introducing or increasing taxes which affect basic commodity and services like excise tax on fuel," the tax reform advocate told The FREEMAN.

"It is becoming apparent that the standards for suspension that TRAIN Law provides do not reflect what the economy needs right now. Whether it is a direct or indirect contribution, the impact of TRAIN Law – specifically the excise tax on fuel and coal – is nevertheless evident in the rising prices of basic commodities," he pointed out.

To offset revenue losses, he urged the government instead to broaden the taxpayer base by modernizing the tax administration.

Abrea cited the Bureau of Internal Revenue had missed its collection targets in the last three years, short of 2.73 percent in 2017, 2.65 percent in 2016 and 13.88 percent in 2015. This is despite a constant year-on-year growth of collections.

"Instead of burdening taxpayers with more taxes, BIR needs to be made more efficient in collecting from a broader taxpayer base with higher voluntary compliance," he pointed out.

Under the package one of the TRAIN law, excise taxes will be imposed in tranches with the scheduled P2 per liter of LPG, P4.50 per liter of diesel fuel and P9 per liter of unleaded premium gasoline this year.

The government has blamed the quickening inflation to the soaring global oil prices.

Inflation last month hit a new record nine-year high of 6.7 percent, pushed up by increasing food and transport costs.

But consumers are also blaming the government's tax increases on fuel and other goods.

Aside from higher taxes on fuel, TRAIN also raised duties on sweetened drinks and cars but it also cut income tax rates.

Dubai crude, which is used by local oil firms to price their products, has been hovering above $77 a barrel since last week of September. On Tuesday last week, it hit $82.89. (FREEMAN)