The effects of refined petroleum products tax in the Philippines Online publication date: Tue, 15-Jul-2014
by Noel D. Uri, Roy Boyd
International Journal of Global Energy Issues (IJGEI), Vol. 7, No. 1/2, 1995
Abstract: This paper uses an aggregate modelling approach to assess the impact of taxes on refined petroleum products on the Philippine economy. The approach used in the analysis consists of a general equilibrium model composed of fourteen producing sectors, fourteen consuming sectors, three household categories classified by income and a government. The effects of removing the 48 per cent tax on premium and regular gasoline and the 24 per cent tax on other refined petroleum products on prices and quantities are examined. The results are revealing. For example, the consequences of a complete elimination of refined petroleum product taxes would be an increase in output by all producing sectors of about 3.7 per cent or about 2.65 hundred billion Philippine pesos, a rise in the consumption of goods and services by about 13.6 per cent or 4.2 hundred billion Philippine pesos, a rise in total utility by 14.3 or 4.5 hundred billion Philippine pesos and lower tax revenue for the government of 62.4 per cent or 2.8 hundred billion Philippine pesos. When subjected to a sensitivity analysis, the results are reasonably robust with regard to the assumption of the values of the substitution elasticities. That is, while the model's equilibrium values do vary in response to different assumptions of the values of these elasticities, the fluctuations are not so enormous as to suggest that the model is unrealistically sensitive to these parameters.
Online publication date: Tue, 15-Jul-2014
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