Should government cut excise tax on gasoline?

Rich folks in diesel-powered vehicles, beware!
Apr 27, 2011

Malacañang has been asked to lower the P4.35 per liter excise tax on gasoline as a way of softening the rising cost of the fuel which often powers tricycles, taxis, farm tractors and fishing bancas.

Rep. Juan Edgardo Angara from the lone district of Aurora, who called for the reduction, said if Malacañang is afraid of cutting the 12-percent value-added tax (VAT) on gasoline for fear of disrupting the VAT chain, it should instead cut the excise tax on gasoline.

"If the anxiety over any VAT reduction is due to the administrative problems in implementing two VAT rates in one system, then that fear is absent in the fixed excise tax on gasoline," Angara said.

Angara also pointed out that VAT isn't the "biggest tax additive" on fuel but excise tax.

Based on the Bureau of Custom's 2010 records, the excise tax paid by importers for bringing in 1.296 billion liters of premium fuel amounted to P5.507 billion while its corresponding VAT payments amounted to only P4.331 billion. For regular gasoline, the excise tax for 297 million liters totaled P1.144 billion while the VAT was just P931 million.

Angara also noted that diesel, like kerosene and liquefied petroleum gas, should no longer be exempted from excise tax as that policy was created when only public-utility vehicles ran on those kinds of fuel.

"Now, most SUVs and premium cars run on diesel," Angara added. "So what we have here is a situation wherein a diesel engine BMW X5 does not pay excise tax while a tricycle does, wherein a diesel-fed Lexus uses fuel which is excise tax-exempt, while a farmer pays an additional P4.35 per liter on the gasoline for his hand tractor."

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