Press Release
July 11, 2009


Opposition Sen. Chiz Escudero yesterday opposed the World Bank's proposal to raise excise taxes saying that the government should instead run after fuel smugglers to boost revenue collections.

"The World Bank excise tax proposal is one recommendation that should be excised out of government options to shore up sagging revenues. In an era of falling incomes, job losses and flat growth, inflicting higher taxes on the people is a perverse way of stimulating the economy," he said.

"It is like fighting the fire of recession with gasoline. Government should instead focus on revenue lost to fuel smuggling. It is the leak that should be plugged," Escudero said.

The WB made the proposal in its latest quarterly update on the Philippines even as it projected that the country's economy would contract for the first time in 11 years.

Escudero pointed out that average daily consumption sharply fell from 303,000 barrels per day in 1997 to 264,000 barrels per day last year - a period of relatively unbroken economic growth and high car sales.

He said that available data shows that the government may have lost P93.3 billion in duties and taxes to fuel smugglers from 2006 to 2008.

Escudero also said that while there were 560,000 new cars on the road last year than there were in 2006, both fuel consumption and fuel tax collection plummeted.

"Although car owners may have cut down in non-essential travel, the decline could not have been that steep. It is a well-known secret that oil smuggling remains a highly protected industry in the country," he said.

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