Philippine economic managers have rejected calls to suspend excise taxes on petroleum products, instead pitching for more subsidies to affected sectors and a shorter working week to cut costs.
The government is expecting to collect 131.4 billion pesos ($2.5bn) this year from excise taxes on fuel, Finance Secretary Carlos Dominguez said on Wednesday.
Yielding to some politicians and transport groups’ call to suspend the levy would cut this year’s revenue by 0.5 per cent of gross domestic product, he said.
Instead, Economic Planning Secretary Karl Chua pitched for more direct aid to affected sectors — including the poorest 50 per cent of households.
He also proposed a four-day working week to reduce costs for businesses and workers, a measure introduced in past oil shocks. A three-month wage subsidy has also been proposed by the country's Department of Labour and Employment.
Russia’s invasion of Ukraine has fanned oil prices, sending shock waves around the global economy, particularly affecting nations, including the Philippines, that import most of their fuel requirements.
Suspending excise tax on fuel will increase this year's deficit to 8.2 per cent of GDP from a projected 7.7 per cent and the debt ratio to 61.4 per cent of GDP from a 60.9 per cent estimate, Mr Dominguez said.
Increasing jeepney — Philippine buses — fares by 1.25 pesos will add 0.4 percentage point to inflation, while a 39 pesos hike in the capital region's daily minimum wage will add 1 percentage point, Mr Chua said.
Meanwhile, the labour department of is seeking approval of a 24bn peso wage subsidy that may run for three months to benefit one million workers, assistant secretary Dominique Tutay said.
Another key area touched upon in the briefing included a government plan to collect as much as 26bn peso in additional value added tax, should Dubai crude average $110 per barrel.