The House Committee on Ways and Means, chaired by Marikina Rep. Miro Quimbo, is considering 17 bills and resolutions related to the fuel excise tax, including a proposal authorizing President Ferdinand Marcos Jr. to suspend or reduce the levy under certain circumstances.

Among the measures under review is a proposal filed by Speaker Faustino “Bojie” G. Dy III and House Majority Leader Ferdinand Alexander “Sandro” A. Marcos, which seeks to empower the President to suspend or reduce fuel excise taxes when necessary.

Another measure, House Bill No. 5779, authored by Leyte Rep. Ferdinand Martin G. Romualdez, proposes the outright removal of the fuel excise tax.

During the hearing, Quimbo asked representatives of oil companies whether retail fuel prices would immediately decline if the President suspends or removes the excise tax of P6 to P10 per liter.

“We want to make this clear so that the people will understand and will not get disappointed, and so that officials in the executive branch will also understand and not expect an immediate reduction,” Quimbo said.

He noted that fuel users currently pay two types of taxes: the 12-percent value-added tax (VAT) and the excise tax, which is also subject to VAT.

“So I asked, will pump prices go down immediately if the excise tax is suspended or reduced?” Quimbo reiterated.

Representatives of oil companies clarified during Tuesday’s hearing that retail prices of petroleum products such as diesel and gasoline would not immediately decline even if the government suspends or reduces the excise tax.

Tanya Samillano, representing the Independent Petroleum Companies Association, explained that oil companies maintain inventories on which excise taxes have already been paid.

“No, Your Honor, it will not be immediately reflected,” she said.

Samillano explained that once petroleum products arrive in the country, the corresponding excise taxes are already paid.

“Once the products reach our shores, we pay the excise taxes. It is the products that have not reached our shores that are not yet subject to excise,” she said.

She added that the impact of a tax suspension or reduction on pump prices would depend on how quickly oil firms exhaust their existing inventories.

“That has been our arrangement with the Department of Energy (DOE),” she told Quimbo.

A DOE representative confirmed Samillano’s explanation.

“That is correct, sir. Hindi po kaagad mararamdaman (It will not be immediately felt),” the official said.

Quimbo noted that a similar situation occurred in 2018, when excise taxes on petroleum products were first imposed.

He said oil companies were allowed to sell their inventories at old prices before reflecting the newly imposed taxes on retail pump prices.