The economic impact of taxes on refined petroleum products in the Philippines

This paper uses an aggregate modelling approach to assess the impact of taxes on refined petroleum products on the Philippine economy. The effects of removing the 48% tax on premium and regular gasoline and the 24% tax on other refined petroleum products on prices and quantities are examined. 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% or about 2.65 hundred billion Philippine pesos, a rise in the consumption of goods and services by about 13.6% or 4.2 hundred billion Philippine pesos, a rise in lower tax revenue for the government of 62.4% or 2.8 hundred billion Philippine pesos. When subjected to sensitivity analyses, the results are reasonably robust.