Incremental revenues from fuel excise tax hike to fund P36-B cash grants for poor 

January 31, 2017

Some 10 million households belonging to the poorest 50 percent of the population will benefit from the proposed fuel excise tax hike under the tax reform bill filed by Rep. Dakila Carlo Cua of Quirino, in the form of one-time unconditional cash grants totaling P36 billion, according to the Department of Finance (DOF).

In a statement Tuesday, Finance Undersecretary Karl Kendrick Chua said Cua’s tax reform measure-- House Bill 4774--includes a provision earmarking 40 percent of the first year incremental revenues from the fuel excise tax adjustments to a targeted transfer program to help the country’s poor and vulnerable sectors through unconditional cash grants of P300 a month--per beneficiary-family for one year-- to help households cope with the temporary price increase.

The total cash grant per household would amount to P3,600 per year, or a total of P36 billion for 10 million households, Chua said.

Another P4 billion would cover administrative costs of distributing the cash grants, for a total of P40 billion set for targeted transfer program, which will be implemented for one year, he said.

DOF estimates show the poorest 10 percent of households will increase expenses by P532 more per year if the fuel excise increase is implemented and another P522 per year as a result of higher prices.

“Thus, tax reform will have a positive impact on poor households who will receive the P3,600 cash subsidy, as they would have a net of P2,546 more to spend per year to help them cope with expenses,” Chua said.

“The targeted transfer program is to mitigate the initial shock of the increase in petroleum excises on the poor and vulnerable sectors. This will allow them to continue spending normally while adjusting smoothly to new price regimes, as well as to weather the initial one-to-two year potential inflationary effect on prices,” Chua said.

Chua said the program will cover the four million Pantawid Pamilyang Pilipino Program (4Ps) beneficiaries and another six million that would be targeted by the government from the poorest 50 percent of the population. DMS