NEDA chief opposes tax hike for gasoline

The Director General of the Philippine National Economic and Development Authority (NEDA) said that any increase in tax on gasoline should be deferred in favor of “more crucial measures,” such as rationalizing fiscal incentives, tax administration measures and indexing taxes on tobacco and alcohol products – also known as “sin taxes” – to inflation. The World Bank suggested in its recent quarterly update that the government raise the excise tax on gasoline to help finance the fiscal stimulus program, while reducing traffic congestion and pollution. It noted that Philippine petroleum products are “lightly taxed by international standards for an oil importing country.” It also said that this proposal is progressive, since gasoline is consumed largely by wealthier segments of the public. But in a statement, then NEDA Director General Ralph G. Recto said that, “We do not believe that a further tax increase should be a priority in the short term… The government holds that it needs to implement the more crucial measures first.” He added that raising petroleum taxes will burden ordinary consumers, as the move will surely translate to higher costs of goods and services. (July 16, 2009)