New year, new tax: Diesel, LPG prices up

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MANILA, Philippines — The new tax on diesel, liquefied petroleum gas, kerosene and bunker fuel for electricity generation and higher taxes on other oil products are scheduled to take effect tomorrow.

The new and higher levies are expected to cause a domino effect on transport fares, cost of electricity and consumer prices.

Also scheduled to take effect at the start of the New Year is the reduction in income tax.

The levies and income tax cut are contained in Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) law.

There is no excise tax at present on diesel, kerosene, cooking gas and bunker fuel.

The tax on diesel and bunker fuel starts at P2.50 per liter in 2018, going up by P2 to P4.50 in 2019 and by P1.50 to P6 in 2020.

The levy on cooking gas will be P1 per kilogram next year, increasing by another P1 to P2 in 2019 and another P1 to P3 in 2020. 

The tax on kerosene starts at P3, going up by P1 to P4 in 2019 and another P1 to P5 in 2020.

Existing impositions on other oil products like gasoline, asphalt, waxes and aviation fuel will likewise go up.

The tax on gasoline, for instance, will increase from P4.35 per liter to P7 in 2018, to P9 in 2019 and P10 in 2020.

Also going up are levies on cars for the mass market, while those on luxury vehicles will go down.

The income tax cut will benefit at least 7.5 million salaried workers, according to Quirino Rep. Dakila Cua, who chairs the House ways and means committee, and his Senate counterpart, Sen. Sonny Angara.

The TRAIN law increases the tax-free income of employees to P250,000 a year or P20,833 a month.

Angara cited concrete examples of how the law would greatly benefit wage earners.

He said under the present tax code, a taxpayer who is single is entitled to a personal annual tax exemption of P50,000 or P4,167 a month.

“This will increase to P250,000 in January, or an additional annual income of P200,000 that will not be subject to tax. The adjustment will translate into an additional monthly tax-free income of P16,667,” he said.

Angara said in the case of a working couple, they will enjoy a combined tax-free income of P500,000 a year or P41,667 a month. At present, they are only entitled to exemptions of up to P200,000.

“This means that they will have an additional annual tax-free income of P300,000 or P25,000 a month,” he added.

He also pointed out that the monthly income of P20,833 that is not subject to tax under the TRAIN law is equivalent to the entry-level pay in public schools. Thus, most public school teachers will no longer pay income tax.

Even critics of the new law concede that it would benefit millions of salaried workers.

However, they said what wage earners will gain from reduced income tax will be more than offset by new and higher taxes on oil products, expanded coverage of the 12-percent value added tax and other levies.

They pointed out that the net impact of the combination of lower income tax, on one hand, and new and higher taxes and other measures, on the other hand, is that the same group of taxpayers who will benefit from TRAIN and the public in general would pay an additional P130 billion a year.

By Jess Diaz (The Philippine Star) | Updated December 31, 2017 - 12:00am

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