TAXING THE RICH TO SUPPORT THE POOR?

Editorial cartoon by Romy Castro

DESPITE STRONG opposition by the public, it appears that the Duterte administration is determined on raising the excise tax on petroleum products.

Economic planners are projecting that the government stands to collect an additional P130.51 billion in 2017, P158.76 billion in 2018 and P249 billion in 2022 should the measure be implemented.

To attain the same, the excise tax adjustment will raise the levy on regular fuel, from P4.35 a liter at present to P10 a liter next year, P10.40 a liter in 2018 and further to P12.17 a liter by 2022.

To back up their stand, Finance Secretary Carlos G. Dominguez III said that “contrary to the common perception that fuel excise tax increases would affect the poor the most, DOF studies show that 60 percent of petroleum products are consumed by the top 10 percent of the country’s top income earners.”

“In fact, the top 200,000 households in terms of salaries and income consumed 20 percent of the fuel products,” Dominguez justified.

Conversely, Dominguez is trying to impress to the public that even if they proceed with the planned raise on excise tax on oil it would hardly make a dent on the poor’s way of living.

As if to sweeten the pot, he added that the money to be raised from the proposal will be used to finance a targeted subsidy scheme similar to the existing conditional cash transfer (CCT) program for poor households.

OpinYon believes that while government planners may have every good intention in coming up with the idea, the arguments they are using however, run contrary to long accepted beliefs and experiences.

How come Dominguez and company could not have known that any slight increase in prices of oil products could drive the prices of goods and services in this part of the world?

The truth is the top 200,000 households he was referring to would hardly be affected by the proposal.

Why? Because they are business owners and industry captains who with just the flick of their fingers could command the prices of goods and services in the market.

For them, profits precede everything and they do not plan to sacrifice their earnings in favor of the welfare of the poor. Not by a long shot, of course.

Therefore, the dream of Dominguez and company to tax the rich to support the poor would never become a reality.

Dominguez could be right however that raising taxes on oil would hardly affect the lifestyle of the poor.

After all, they are so economically deprived that they really have no lifestyle to speak of in the first place.

 

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Monday, 16 December 2019
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