The Senate on Tuesday approved a priority measure granting President Marcos Jr. emergency powers to suspend or reduce excise taxes on petroleum products to cushion the inflationary effects of the ongoing oil crisis stemming from escalating tensions in the Middle East. 

The approval came a day after its counterpart bill hurdled the House of Representatives. Both measures were certified as urgent by the President. 

Senate Bill 1982 reached the plenary on Monday for floor debate before being unanimously approved with 17 affirmative votes a day later. 

The Senate-approved measure aims to authorize Marcos to suspend or reduce the excise taxes on petroleum products during periods of high global prices or “when the average Dubai crude oil price based on Mean of Platts Singapore has reached or exceeded $80 per barrel for one month preceding the issuance of the suspension or reduction order.”

The measure mandated that the suspension shall not exceed one calendar year and shall be exercised only until 31 December 2028.

Meanwhile, under the House version, the emergency powers can only be exercised only if the President has declared a state of national emergency or calamity, and that condition leads to extraordinary increases in domestic petroleum pump prices, as certified by the Secretary of Energy. 

Senator Risa Hontiveros said that while the proposed law will provide immediate relief to Filipino households and small businesses already grappling with the rising costs of necessities and transportation, the effects are only “short-term” and will not completely insulate the public from the looming skyrocketing prices.  

She argued that suspending the excise tax alone would not stop the global markets from further increasing petroleum prices, and that any “reduction in the [local] pump may be limited and in some cases delayed.’

Hontiveros asserted that the proposed law must be complemented with a supplemental budget from Congress to provide direct assistance to sectors hardest hit by the oil crisis, including PUV drivers, farmers, and fisherfolk.

Initial projections pegged the supplemental budget at P52.8 billion, covering subsidies for repatriation, transportation, and agriculture for the whole year. 

The lion’s share of the estimated budget shall bankroll the emergency fund for the repatriation and reintegration of overseas Filipino workers stranded in the Middle East at P38 billion, followed by transportation and agricultural subsidies with P12 billion and 2.8 billion, respectively. 

Hontiveros previously said that the funding for these subsidies could be sourced from the P70 billion in discontinued flood control projects in 2025, as well as from the P2.5 billion farm machinery of the Philippine Center for Postharvest Development and Mechanization.

In the same vein, Senator Win Gatchalian warned that the looming suspension of the excise tax from May to December could cost the government a whopping P121.4 billion in revenue losses, though the projected shortfall could reach as high as P136 billion if coupled with the proposed value-added tax suspension.

Combined revenues from excise tax and VAT amount to roughly P276 billion a year on average, Finance Undersecretary Karlo Adriano told a Senate hearing last week.

Data from the DOF showed that revenue collections from excise tax and VAT on petroleum products totaled approximately P160 billion from 2021 to 2025.

Gasoline is the primary contributor, with an average of P71.2 billion annually, followed by diesel at P65.6 billion. 

Adriano said that the projected revenue shortfall of P136 billion accounts for 0.45 percent of the country’s gross domestic product and will prevent the government from incurring a larger deficit, leaving several programs unfunded.