Amid rising fuel prices, poor families will be receiving additional aid through a monthly subsidy of PHP 200 per household.

With fuel prices on the rise, President Rodrigo Duterte approved the proposal by the Department of Finance (DOF) for additional aid, which includes providing a monthly subsidy of PHP 200 per household for poor families.

Monthly Subsidy, Explained

During the Talk to the People address, which was aired on Wednesday, March 16, Finance Secretary Carlos Dominguez III recommended providing additional aid to the bottom 50% of all Filipino households through unconditional cash transfers amounting to PHP 200 per month per household for a year. He further adds that this will total PHP 33.1 billion in budgetary requirements, with 12 million households benefiting from this.

“Mr. President, we realize that this is not enough, but this is what we can afford as of this time,” he says.

In response to the recommendation, President Duterte affirms the proposal, saying, “Sige, ’yun ang policy ng executive department.”

During a press briefing that same day, Presidential Spokesperson Martin Andanar confirms the statement from the president. “Kung kailan po ito maibibigay, hintayin muna natin lumabas ang guidelines po ng Department of Budget and Management,” Andanar affirms.

[Rough Translation: Let us wait for the guidelines from the Department of Budget and Management to know when this will be given.]

Budgetary Requirements

Aside from a monthly subsidy, one of the alternatives proposed include suspending fuel excise taxes. But according to Dominguez, this will reduce total government revenue in 2022 by PHP 105.9 billion—equivalent to 0.5% of the Gross Domestic Product (GDP).

He further adds that the expected PHP 147.1 billion from fuel excise tax and Value Added Tax (VAT) in 2022 was already allocated for expenditures—like the Build, Build, Build program and even the salaries of government employees, soldiers, policemen, and teachers. “If we suspend this and we don’t collect it, what will happen is our [deficit-to-GDP] ratio will go up from an estimated 7.7% to 8.2%,” he explains.

“And it will mean that if we will continue to spend the same amount of money, we will have to borrow more money,” he continues.

Targeted Relief vs. Suspending Excise Taxes

On the other hand, if excise tax is suspended, the cost of fuel will be reduced by PHP 10. But Dominguez elaborates that the top 10% of income earners consume almost 50% of fuel, which does not benefit the bottom 50% of the country’s population. For this, he proposed the alternative of “targeted relief”—funded by higher VAT taxes from higher fuel prices.

“We think the average price might be around $110 per barrel for the year, therefore we will have [an] additional PHP 26 billion to distribute directly,” Dominguez explains.

Senator Grace Poe, however, remarks that the subsidy was a pittance. “At PHP 6.66 per day, it can’t even get one a jeepney ride to the minimum distance,” she said in a statement, adding that she hopes that the government still gives serious thought to suspending fuel tax or increasing the PHP 200 monthly subsidy, which she says is “not enough to see our people through these hard times.”

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