Thursday, November 18, 2021

Tax Cut 35, Why oil taxes should be small or zero

Oil is a useful public good. Not a public bad. So oil taxes should be as low as possible, if not zero. If people think oil is a public bad, they should consider doing cow de carabao tilling of land instead of using tractors. Or transport vegetables from Cordillera or Bicol regions, bangus and other fishes from Ilocos via horses instead of trucks. Double talk about oil is easy but actually living it is impossible.

Here is one instance of double talk, see this article:

Another lazy policy
Cielito F. Habito  04:04 AM November 16, 2021

(1) "The problem with lifting fuel excise taxes, even temporarily, is that the rich would benefit more from it than the poor."

Aah, those millions of motorcycle riders and tricycle/jeep/bus drivers nationwid, the farmers needing tractors, harvester-thresher combine machines, water pumps, tricycles and trucks; the fisherfolks on motorboats -- they are the rich friends and family members of Ayalas, Sy, Villars, etc? 

The rich and super-rich don't spend much on gasoline and road travel. Rather, they spend big on expensive real estate, in big houses and condos in Makati, BGC, Ortigas, etc. It's the poor who live in Bulacan, Rizal, Cavite, Laguna, and travel to Metro Manila to work and do business.

This argument of Ciel is similar to the arguments of Action for Econ Reforms (AER) and DOF, "non-govt organization" and government, in their TRAIN lobby in 2017, even until now.

(2) "Oil taxes also have the important useful function of internalizing the external costs to society of fossil fuel consumption from associated carbon emissions."

Oops, Ciel lives in Laguna and pre-pandemic would travel daily to Ateneo or elsewhere by car and fossil fuels, not by bicycle or skateboard. Similar to thousands of planet saviors who fly to annual big UN COP climate meetings on fossil fuels then lambast fossil fuels. To avoid double talk, those planet saviors should fly only via giant kites or solar planes. Or stay home and do virtual conference.

(3) "The DOF estimates the revenues to be foregone at up to P147 billion in 2022. Rather than lose this amount and have the unwanted effects cited above, the government could more effectively meet its pro-poor objective if it’s used to subsidize public transport and provide economic relief and social protection for the poor."

Then P147 B of money would stay in the pockets of farmers, fisherfolks, commuters and motorists, rich and poor. Leaving money in the pockets of the poor is a better "subsidy" and "social protection" than taking the money away and be given to multiple layers of bureaucracies and political offices. When government gets more money, it just creates more spending, like travels and salaries of people to fight less rain and more rain, less storms and more storms, less cats and more cats.

From a barrel of crude oil, on average only 46% goes to producing gasoline, jet fuel, diesel. The other 54% is used for health, chemicals, consumer goods, asphalt, etc.

Again, oil is a useful public good. Not a public bad.

Again, double talk is easy but actually living it is impossible.

Our huge public debt, P11.2 trillion as of September 2021, was P8.2 trillion in December 2019 -- it will require huge taxes tomorrow. It is important, very important, that the next admin should have very explicit, categorical policy to control new borrowings -- PNoy Aquino did that -- and focus on cutting spending, not raising taxes.

Another alternative is to have large-scale privatization of many government corporations and assets. Govt should share the burden of public debt, not just getting money even under lockdown and large-scale business closures then resort to huge borrowings.

Interest payment alone, 2018 P349 B, 2019 P361 B, 2020 P380 B, Jan-Sept 2021 P339 B, about P38 B/month. Just by cutting borrowings via spending cut and/or large privatizations, the govt and taxpayers can save few billions/month in interest payment alone.

See also:

1 comment:

TraffMagic said...

In the thought-provoking blog post "Tax Cut 35: Why oil taxes should be small or zero," the author delves into the crucial topic of oil taxation. Through compelling arguments and analysis, they highlight the potential benefits and rationale behind implementing lower or zero taxes on oil. This thought-provoking perspective sheds light on an important aspect of fiscal policy and encourages further discussion on the subject.