Senators back emergency power for BBM to cut taxes

Senators on Tuesday expressed support for granting President Ferdinand Marcos Jr. emergency powers to cut excise taxes on petroleum products, aimed at cushioning the potential inflationary impact of the ongoing conflict in the Middle East.

Senator Bam Aquino filed Senate Bill 1923, which seeks to amend Section 148 of the National Internal Revenue Code of 1997 to allow the President to suspend the collection of the excise tax on petroleum products.

The Chief Executive cannot unilaterally suspend the imposition of mandatory excise taxes unless Congress passes a law. The TRAIN Law (RA 10963) mandates the automatic suspension of the excise tax on petroleum products when the average Dubai crude oil price reaches or exceeds $80 per barrel for three consecutive months.

Aquino stressed the need to immediately put precautionary measures in place, warning that delayed or rigid responses could exacerbate economic pressures and hit hard low-income families who lack a safety net against a sudden price spike.

Senate Majority Leader Juan Miguel Zubiri warned that a sharp increase in petroleum costs would adversely affect food prices, transportation and electricity.

“We must act immediately so [that] it can help temper sudden spikes [in] the prices of important commodities such as food and electricity,” Zubiri said. “I believe that granting the President the power to reduce or suspend the excise tax on fuel is a good first step in addressing the potential crisis.”

The excise tax is a specific levy charged per liter of petroleum products under the TRAIN Law, added on top of the pump price and then factored into the VAT base, which means consumers effectively pay both the excise tax and the Value-Added Tax.

Excise taxes add P10 per liter to gasoline, P6 per liter to diesel, and P3 per liter to kerosene, amounts that immediately take a toll on ordinary Filipino families when prices climb, Zubiri said.

The Middle East is a major oil exporter, and the escalating conflict among Israel, the United States and Iran could disrupt shipping, resulting in a global price shock.

Like other countries, the Philippines is already grappling with the effects of Iran’s continued strikes in retaliation against Israel and the United States as it braces for another round of price increases.

Pump prices are expected to rise by almost P2 this week, marking the eighth straight week of increases for gasoline and the 10th for diesel and kerosene.