Pump prices may drop as BBM signs tax law: Economist Monsod: Stupid suggestion

President Ferdinand “Bongbong” Marcos Jr. has signed into law a measure suspending the collection of excise taxes on fuel products, granting the government a flexible mechanism to help bring down pump prices and shield consumers from the impact of volatile global oil markets.

The new law will allow the temporary removal or reduction of the excise tax on petroleum products — one of the biggest components of fuel pricing — resulting in a drop in the retail prices of gasoline, diesel and LPG. This is expected to benefit motorists, public transport operators, farmers and industries heavily reliant on fuel.

The suspension, however, is not automatic.

Under the law, the President may only exercise the authority upon the recommendation of the Development Budget Coordination Committee, in coordination with the Department of Energy (DoE) to ensure the move is calibrated and responsive to market conditions.

The trigger points include: when the average Dubai crude oil price (based on the Mean of Platts Singapore) reaches or exceeds $80 per barrel for one month, or when a national emergency or calamity results in extraordinary increases in domestic fuel prices.

Once implemented, the suspension may last for up to six months and may be extended to a maximum cumulative period of one year, subject to congressional approval. The authority granted under the law will remain valid until 31 December 2028.

“We have coordinated with Congress to reduce and remove the excise tax on oil. That is the legislation we initially requested. Their review of the measure has been completed, and it is now with us,” the President said.

Marcos noted, however, that timing remains critical given the unpredictable nature of global oil prices.

“Nonetheless, we are still determining the timing. The challenge here is that prices are constantly changing. As you all know, when you wake up in the morning, prices are already different,” he said.

Monsod: Stupid suggestion

Former Socioeconomic Planning Secretary Solita Monsod, however, described the suspension of the excise tax on fuel as stemming from a stupid suggestion.

“The one who gets hurt the most is the poor, and when you suspend the excise tax on oil, you’re helping the rich also and reducing the amount of revenues you need for development projects,” Monsod explained.

“What you need is a new source of revenue, and the best source of revenue is the wealth tax,” she held.

No oil control

The signing comes as the government ramps up efforts to manage the country’s fuel situation following the declaration of a National Energy Emergency under Executive Order No. 110, making the Philippines the first country to declare such a nationwide measure.

Despite calls for stronger intervention, Marcos earlier declined to discuss the possibility of using his authority to control the oil companies.

“We don’t want to get into that discussion,” he said before leaving Malacañang after a press conference on Wednesday.

At the same time, the administration is working to secure supply stability. Marcos said the Philippines currently has a 45-day fuel buffer and is actively exploring alternative suppliers beyond traditional sources, particularly those unaffected by the ongoing tensions in the Middle East.

“Again, I attribute this success to the strong relations we have with our partner countries around the world. We have not only engaged traditional oil suppliers but have also explored other sources that are not affected by the ongoing conflict in the Middle East. It would be premature to say that contracts have been finalized, but it is safe to say that opportunities are opening up,” he said.

“I think we can be fairly confident that after the 45 days, shipments will already be arriving in the Philippines. We expect a continuous flow of oil — not just one or two deliveries, but a steady supply of petroleum and related products,” he added.

P20B released

Meanwhile, the Department of Budget and Management has released P20 billion to the Department of Energy to further stabilize the fuel supply and cushion price shocks.

Sourced from the Malampaya Gas Fund, the allocation will finance the government’s Emergency Energy Security Program, including the strategic procurement of fuel such as diesel, gasoline and LPG to boost national reserves and support key sectors, including transport, logistics, agriculture and emergency services.

“Under the President’s directive, we are moving with urgency to ensure fuel remains available, prices are moderated, and essential services continue without interruption. This is the government acting ahead of the crisis — not reacting after the damage is done,” Budget Secretary Rolando U. Toledo said.

The procurement will be implemented by the Philippine National Oil Company–Exploration Corporation, which has begun augmenting the domestic supply.