A conditional suspension of the excise tax on fuel, and the scrapping of several lines of exemption in the Value-Added Tax (VAT).
Sen. Panfilo “Ping” M. Lacson said this is the two-pronged formula that can give Filipinos some badly needed breathing room from the effects of prohibitive fuel prices.
“We can conditionally suspend excise taxes on fuel when oil prices reach a threshold price in the international market such as $90 or even $100 per barrel. This could provide some breathing space not just for the transport sector but those affected by high fuel prices,” Lacson said in an interview with the media Sunday evening.
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On the other hand, he said the government should cut the lines of exemptions in the VAT, as the Philippines is the only country in Southeast Asia with more than 100 lines of exemption.
“We could have earned at least P117 billion in additional tax revenues in 2018 alone, even with a reduced VAT rate from 12% to 10%, by removing 78 lines of exemption from some sectors such as the power sector, cooperatives, housing, and economic zones,” he said.
“The VAT exemptions have been there for so long. It’s about time to review these lines of exemptions and reduce the number of exemptions,” he added.
Lacson said this would be better than proposals to give subsidies to poor and middle-income households – a measure that may strain the budget.
He noted a big chunk of the budget already goes to social welfare programs like 4Ps as well as subsidies for agriculture, micro-, small and medium enterprises.
“Baka hindi kayanin ng budget (The budget may not be enough for these),” he said.
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