* This is my article in
BusinessWorld last January 17, 2017.
An excise tax is defined by the Department of Finance
(DoF) as “a tax on products that have a negative effect on health or the
environment... on nonessentials and luxury items.” With this definition, the
DoF therefore, should abolish the tax on oil products, not increase it.
Here also are the 10 myths and alibi why the DoF and
other sectors tend to demonize oil and are proposing oil tax to be as high as
possible.
MYTH 1
OIL IS BAD FOR THE
ENVIRONMENT.
Truth: Transportation of people and goods via cars,
jeepneys, buses, and trucks that use oil is good for the environment because
there will be no need for millions of cows, carabaos, or horses that produce
tons of animal manure on the roads daily. Sure, there are particulates and
other polluting gases but they are minor compared to tons of animal manure
everywhere, more dirt, flies and worms in the environment. Also, cheaper LPG
will encourage poor households to stop using firewood and charcoal for cooking
which will result in more trees being saved.
MYTH 2
OIL IS BAD FOR
PEOPLE’S HEALTH.
Truth: Cars, vans, jeepneys, and buses that use oil spare
the oldies, sick, babies, pregnant women, etc. of hard labor and more diseases
due to exposure to heat, rains, dust, and exhaustion if they were to ride
bicycles or skateboards or animals that do not use oil. Also, transport of
agricultural products from Ilocos, Cordillera, Cagayan Valley, or Bicol to
Manila via animals not trucks will only lead to food spoilage. People will have
little or no access to fresh vegetables and fruits, resulting in poor health.
MYTH 3
OIL IS NOT A
PUBLIC GOOD.
Truth: Oil is a public good. As shown above, no
petroleum, no modern and comfortable life, no mass production of food and
transportation of people and goods. Public goods like public education, public
health care, roads, bridges, etc. are either provided to the people for free or
highly subsidized prices. Oil as a public good only needs zero tax, or at least
low tax.
MYTH 4
MORE CO2 EMISSION
FROM OIL MEANS MORE POLLUTION, MORE “MAN-MADE” CLIMATE CHANGE.
Truth: CO2 is not a pollutant gas; it is a useful gas. It
is the gas that humans exhale, the gas that our pets and farm animals exhale,
the gas that plants use to produce their own food via photosynthesis. Climate
change is natural and cyclical. Planet Earth is 4.6B years old, there was climate
change ever since marked by warming and cooling cycles.
MYTH 5
INCREASING THE OIL
TAX IS NECESSARY TO FINANCE MORE PUBLIC INFRASTRUCTURE.
Truth: Government has trillions of pesos already from
income taxes (corporate and individual), VAT; excise tax from alcohol, tobacco,
mining, new vehicles; from documentary stamp tax, franchise tax, from annual
vehicle registration tax, withholding tax, capital gains tax, travel tax. And
from various regulatory fees (passport fees, driver’s licenses, terminal fees,
etc.)
Government simply has too many personnel, officials,
employees, consultants and pensioners; too many offices, travels, trainings,
and meetings. Perhaps these items alone constitute about 70%-80% of the annual
budget. So little is left for public infra, school buildings, government
hospitals, etc.
MYTH 6
THE OIL TAX
INCREASE WILL HAVE MINIMAL IMPACT ON THE POOR.
Truth: Oil is used by the poor not only in jeepneys but
also in tricycles, farm tractors and harvesters, irrigation pumps, fishing
boats, interisland boats, generator sets in off-grid islands. While the DoF
plans to introduce “Pantawid Pasada” for jeepneys, nothing has been allotted
for farm tractors and other equipment used by poorer farmers, fisherfolks,
hunters, etc.
As shown below, fishing boats that use gasoline, tractors
and irrigation pumps that use diesel, tricycles that also use gasoline, will be
slapped with 12%-19% price hike simply because of the proposed tax hike (see
table).
MYTH 7
THE OIL TAX
INCREASE WILL HIT THE RICH MORE THAN THE POOR.
Truth: Oil use is a small portion of the overall
consumption of the rich. The rich buy more expensive but more fuel-efficient
cars and SUVs, they spend more on expensive restaurants, hotels, schools and
universities, condos and subdivisions, etc.
MYTH 8
FOOD PRICES WILL
NOT GO UP SIGNIFICANTLY WITH OIL TAX HIKE.
As mentioned above, oil is used not only by trucks,
jeeps, and boats that transport agriculture, meat and fishery products. Oil is
also used by farm tractors and harvesters, fishing boats. A 3.6% food inflation
in 2016 (despite around 50% hike in diesel prices) is not small for the poor.
MYTH 9
NO OR LOW EXCISE
TAX MEANS SUBSIDIZING THE OIL CONSUMPTION OF THE MIDDLE CLASS AND RICH.
Truth: There is no subsidy, zero, unlike subsidies for
public education and health care or rice price subsidies using tax money. When
you walk down the street and encounter a mugger who didn’t demand your money,
you do not owe that mugger anything.
MYTH 10
GOVERNMENT IS
LOSING SOME P145 BILLION/YEAR POTENTIAL OIL TAX REVENUES.
Truth: Government has no entitlement to more income and
savings of the people other than income taxes that are already high, and other
existing taxes. Government is losing more from wasteful spending or stolen
money via corruption. Government can save more money for infrastructure by
reducing too many personnel and consultants and by abolishing and defunding old
welfare programs that do not work before it creates new welfare programs.
Bienvenido S. Oplas, Jr. is the head of Minimal
Government Thinkers and a Fellow of SEANET. Both are members of Economic
Freedom Network (EFN) Asia.
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