House panel endorses P6 diesel tax

MANILA, Philippines - The House of Representatives ways and means committee has agreed in principle to endorse a bill imposing a P6 diesel tax and increasing levies on other oil products and on cars.

The measure also seeks to reduce personal income tax.

The committee arrived at a consensus to endorse the bill after hearing the opposition of Social Welfare Secretary Judy Taguiwalo to the proposed tax on diesel, cooking gas, kerosene and bunker oil for electricity generation, and higher taxes on other oil products.

She said the new tax and higher levies would “drive up inflation and result in price increases,” the brunt of which would be borne by the poor.

The bill contains the so-called tax reforms proposed by the Department of Finance.

Under the measure, there would be an initial tax of P3 per liter or kilogram on diesel, kerosene, liquefied petroleum gas (LPG), bunker fuel and asphalts starting July 1 this year.

The tax would increase by P2 to P5 on Jan. 1, 2018 and to P6 starting Jan. 1, 2019.

At present, there is no excise tax on diesel, kerosene, cooking gas and bunker fuel, while the levy on asphalts is only 56 centavos per kilogram.

Diesel is used in public transportation, while bunker fuel is used for electricity generation. Most households cook food with LPG.

Under the original DOF-drafted bill, the tax on these products would be P6 starting last Jan. 1.

The measure also seeks to increase the tax on lubricating oils and greases, waxes, regular gasoline, leaded gasoline, unleaded gasoline and aviation gas to a uniform P7 starting July 1, 2017.

The current levies on these products are P4.50, P3.50, P4.35, P5.35, P4.35 and P3.67 per liter or kilogram, respectively.

The tax will go up to P9 on Jan. 1, 2018 and P10 on Jan. 1, 2019.

The new measure no longer contains the DOF proposal to scrap tax exemptions senior citizens and persons with disability enjoy.

As for the reduction in personal income tax, those earning up to P250,000 a year would pay no tax.

Those with income of more than P250,000 to P400,000 would pay a tax of 25 percent of the amount in excess of P250,000.

Those with income of more than P400,000 up to P800,000 would have a tax of P30,000, plus 25 percent of the excess over P400,000. Those earning from P800,000 to P2 million would pay P130,000 plus 30 percent of the excess over P800,000, while those with income of P2 million to P5 million would pay P490,000 plus 32 percent.

Those earning over P5 million would pay P1.450 million plus 35 percent of the excess over P5 million.

Under the present law, those earning over P500,000 after maximum deductions of P200,000 for a working couple pay an income tax of P125,000 plus 32 percent, which is the maximum rate of the excess over P500,000.

The tax on cars, including sport utility vehicles, worth up to P1.1 million would go up by 100 percent.

Those worth between P1.1 million and P2.1 million would be assessed a tax of P224,000 plus 100 percent of the excess over P1.1 million, while those valued at more than P2.1 million would be levied P1.224 million plus 200 percent of the excess over P2.1 million.