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Gov’t to spend P38-B to offset impact of higher fuel tax on the poor

Safety nets to include cash assistance, fuel subsidy cards and jeepney modernization

Updated

By Genalyn Kabiling

The government is expected to spend P38 billion to implement the cash subsidy program for poor families and two other safety net programs to mitigate the impact of the planned higher excise tax on petroleum products.

Finance undersecretary Karl Kendrick Chua said at least P30 billion would be set aside to provide cash assistance to 10 million poor households for a year once the higher fuel rates take effect.

Another P8 billion would be allocated for “Pantawid Pasada” program or fuel subsidy cards for affected public transport drivers and the jeepney modernization program.

oil

“The cash transfer will be P300 per month for one year. This will be temporary. It will be given to 10 million poorest households to ease the impact of the moderate and sudden increase of inflation,” Chua said in a Palace press briefing on Friday, January 27. “After one year, inflation becomes moderate.”

Under the Pantawid Pasada, the government plans to extend cash cards to public transportation drivers which they can use whenever they buy fuel. Chua said the project is similar to the previous government intervention implemented a few years ago when oil prices increased.

“We will revive the program to subsidize public utility vehicles so they will not pass on jeepney fares or public transport fares,” he said.

As for the modernization program for public utility jeepneys, Chua said PUV drivers and operators will get assistance to make their vehicles more efficient and obtain better gas mileage.

“Should their jeepneys be modernized, their 4-kilometer-per-liter fuel efficiency will become 8 to 10 kilometers so it will be offset despite the increase in diesel excise tax,” he said.

The three subsidy programs have been proposed after the Department of Finance pushed for the passage of a tax reform package, including the proposed staggered increase of excise tax on petroleum products.

Under the proposal, the excise taxes on fuel products could go as high as P6 per liter. Higher fuel taxes could drive up prices of basic commodities, electricity and others.

Other tax reform proposals of the government are to lower personal income taxes, broaden the VAT base and increase excise taxes on cars.

The tax-related measures are being pushed to shore up government revenues needed for infrastructure development and expansion of social services.

“We are redesigning our tax system to be simpler, fairer, and more efficient for all, while also raising the resources needed to invest in our infrastructure and our people. Our goal is to correct our tax system’s inquiry,” Chua said.

Chua assured the gains from the lower personal income tax regime are more than enough to offset the additional expenses from higher oil prices, car loan payments and inflation.

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