Oil tax hike insensitive and will make poor Filipinos suffer more

May 5, 2020

by IBON Media & Communications

Research group IBON said that raising taxes on imported oil products will push prices up and burden many poor households already struggling with jobs and income losses amid the COVID-19 pandemic. The group said that government should instead look to better sources of response funds such as taxing the super-rich.

The Duterte administration recently issued an executive order increasing taxes on imported crude oil and refined petroleum products to 10 percent. This is supposed to fund government’s COVID-19 response.

IBON said this oil tax increase will ultimately be passed onto consumers, especially the poor, through higher prices. Some 18.9 million working people and their families are already dealing with mass unemployment, income losses and delayed and insufficient social amelioration.

The oil tax hike comes on top of additional oil excise taxes already from the government’s regressive Tax Reform for Acceleration and Inclusion (TRAIN) program. The TRAIN law hiked oil excise taxes by Php6 per liter of diesel, Php5.65 per liter of gasoline, Php5 per liter of kerosene, and Php3 per kilogram of liquefied petroleum gas (LPG).

The additional oil tax will make socially sensitive products more expensive as well as increase the general price level. Instead of pursuing this grossly insensitive revenue measure, IBON said that government should instead impose a wealth tax on the country’s super-rich.

The Philippines’ 50 richest have Php4.1 trillion in combined wealth, which is more than what the poorest 71 million Filipinos own put together, the group said. A tax of 1% on wealth above Php1 billion, another 2% above Php2 billion, and another 3% above Php3 billion will raise Php236.7 billion from these 50 richest individuals alone.

The wealthy can well afford to pay more taxes and this will not have any effect at all on their already extremely high standards of living, said IBON. Tax revenues from this can then be prioritized towards fighting the COVID-19 crisis and providing sufficient social amelioration for poor and vulnerable Filipinos.