Senators support giving Marcos authority to cut excise tax on fuel

Senators on Tuesday expressed support for granting President Marcos Jr. emergency powers to cut excise taxes on petroleum products, aimed at cushioning the potential inflationary impacts 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 excise tax on fuel.

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 hardly hit low-income families who lack a safety net against a sudden price spike.

Senate Majority Leader Migz Zubiri warned that the potential jacking up of petroleum costs has adverse effects on food prices, transportation and electricity. Hence, swift government intervention is necessary.

“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 granting the President the power to reduce or suspend excise tax on fuel is a good first step in addressing the potential crisis.”

Fuel excise tax is a specific tax 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 VAT.

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

The Middle East is a major oil exporter, and the ongoing heightened conflict between 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 fuel price increases.

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

Senator Ping Lacson backed cutting the excise tax and appealed to his fellow lawmakers to “give serious consideration” to the President’s request.

Senate Committee on Foreign Relations Chair Erwin Tulfo agreed with his colleagues. He announced that his committee will hold a hearing on Friday with the Department of Foreign Affairs, Department of Migrant Workers, Department of Energy and Department of Transportation, among others, to discuss measures aimed at cushioning the effects of the ongoing crisis in the Middle East.