Prominent economist Solita "Winnie" Monsod has sharply criticized government proposals to suspend fuel excise taxes amid rising costs linked to the Iran conflict, calling the plan "stupid" and "foolish" in a recent interview.
Monsod argues that suspending the fuel tax would disproportionately benefit wealthy Filipinos alongside the poor, suggesting instead a 3% wealth tax on individuals with net worth exceeding ₱3 billion. She estimates this could fund direct cash assistance programs for lower-income households while preserving the ₱136 billion in projected fuel tax revenue for 2026.
"That is a stupid suggestion because that tax is an aggressive tax, the ones who get hurt most are the poor. When you suspend the excise tax on oil, you're helping the rich also," Monsod told journalist Pinky Webb on the Bilyonaryo news channel.
While acknowledging that fuel tax suspension sacrifices government revenue, critics note Monsod's characterization overlooks the tax's flat-rate structure. Since the excise tax charges a fixed amount per liter (₱6 for diesel), the proportional benefit of suspension remains equal regardless of purchase volume, potentially mitigating regressive effects on lower-income consumers who typically buy less fuel.
Monsod's wealth tax proposal faces significant practical challenges. Historical data shows most countries that implemented similar taxes eventually repealed them due to administrative difficulties and limited revenue generation. A 2023 OECD report revealed that only four of 38 member nations maintained wealth taxes by 2017, down from twelve in 1990.
Countries still employing such taxes—including Spain, Switzerland, and Norway—collect modest proportions of total revenue: 4.3%, 1.5%, and 0.6% respectively. These nations possess substantially stronger institutional frameworks than the Philippines, where experts suggest administration costs might exceed additional revenue without comprehensive governance reforms.
The debate highlights tensions between immediate economic relief measures and sustainable fiscal policy, with Monsod's proposals sparking discussion about equitable taxation approaches during periods of economic strain.