Back to Home | Back to headline

Finance dep’t studying carbon-emissions tax

July 19, 2018

THE DEPARTMENT of Finance (DoF) said it is studying the possibility of a tax for carbon emissions after it held an “exploratory” workshop yesterday.

Asked whether the DoF will propose such a tax within the current presidential term, Finance Undersecretary Karl Kendrick T. Chua replied: “Maybe. We’re just learning as much as we can because it’s a new tax. You know this is a global priority so it is something we want to learn and see if we are ready to propose a carbon tax.”

“So this is exploratory,” he said on the sidelines of the workshop in Manila.

The carbon tax was originally part of package five of tax reform proposals along with increased coal, tobacco, alcohol, and mining taxes, depending on whether the government needs to raise more revenue. Some of the taxes were included in the Tax Reform for Acceleration and Inclusion (TRAIN) law, or Republic Act No. 10963, which came into effect this year.

Mr. Chua added: “The government will always need revenue because the demands are increasing for infra(structure), health, social spending (and) for the environment.”

Senator Loren B. Legarda on Wednesday said that the country continues to depend on non-renewable energy, even after the passage of the Renewable Energy (RE) law of 2008.

The DoF’s Mr. Chua, however, said that this is because fossil fuels are not taxed accordingly.

“Diesel and bunker were taxed at zero excise, so that’s why… the way to promote renewables is not only to give incentives. [But] also to tax the alternative, because how else will you encourage the shift?” he said.

He said such taxes are in force in places like the UK, where the tax on diesel represents about 70-80% of the fuel’s retail price. In the Philippines, the tax is equivalent to 5% of retail.

He said added that the TRAIN law has addressed some environmental concerns.

The TRAIN law imposed a gradual P6 per liter tax in diesel and bunker fuel, starting with an initial P2.5 tax per liter this year, followed by P2 and P1.5 for the next two years.

The excise tax for coal was also increased to P50 per metric ton this year, and will be increased to P100 and P150 for 2019, and 2020, respectively.

“The law begins to address it. Over time, we hope it will make a dent as we increase it gradually,” Mr. Chua said.

After the first package was enacted in January, the government hopes to pass by the end of the year Package 1B, covering a general and estate tax amnesty, an easing of the bank secrecy law, and the increase in the motor vehicle user charge; as well as Package 2, which lowers corporate income tax and streamlines fiscal incentives.

The DoF also aims to submit to Congress this month the third and fourth package concerning property valuations and the tax on passive income, respectively. Mr. Chua also noted that Package 2+, concerning higher taxes on alcohol, tobacco, and mining, is already in the legislative mill.

“There will be at least six packages in Congress by August. So that’s a big load for Congress. So really, it depends on Congress when these will be passed,” he said.

“I’m really hopeful that at least they pass the three that are already in the hearing stage. So that’s the minimum that we hope Congress can pass this year. The rest can follow,” added Mr. Chua. — Elijah Joseph C. Tubayan

Source: Business World