An economist urged the government to temporarily slash fuel excise taxes to boost spending and sustain economic activity amid rising oil prices.

Economist and infrastructure specialist Ronilo Balbieran said the Philippines is facing a slowing economy due to setbacks in infrastructure spending, alongside surging oil prices that could drive inflation.

“Our problem of excessive use of diesel that leads to pollution is now the least of our concern,” Balbieran told DAILY TRIBUNE.

“Our most important concern is that the price and cost of transport and logistics have gone so high that our economy might suddenly halt due to the lack of movement of people and goods, [which] creates spending and businesses across the country.”

Balbieran, an environmental planner and vice president of the Research, Education and Institutional Development Foundation, said the government should encourage public spending despite rising prices by reducing excise taxes under the President’s emergency powers.

“The government should [e]ncourage continuous spending to keep the engines of our economy running. This can be done by reducing the excise tax temporarily,” he said.

“[This] suggestion is on top of giving cash subsidies to poor families and oil subsidies or discounts to transport operators (jeepney and bus owners/drivers)," he added.

Balbieran acknowledged that standard policy favors collecting higher excise taxes to fund subsidies but said current conditions require faster cash circulation. He added that the government should adopt countercyclical measures, including cutting taxes and redirecting unused funds to support households and businesses.

“One cannot expect a government to continue taxing an oil consumption that is fast [declining] and ironically might contribute to the overall silent journey to depression of the lower-income Filipinos," he said.

Industry response

Meanwhile, Balbieran said the oil crisis is pushing the logistics sector to adopt cost-saving measures, including co-loading or combining shipments to maximize truck capacity.

“If trust and appropriate controls/systems are in place, co-loading the two separate clients with 50 percent each into one truck, then you can actually reduce trucking cost by 50%. They only need to figure out the trust and system part, which they have avoided for years,” he said.

He added that rising fuel costs are accelerating plans for a green transition, including the use of solar panels, electric or hybrid vehicles, and other energy-saving measures in logistics operations.

President Ferdinand Marcos Jr. is set to meet with the Development Budget Coordination Committee to discuss possible suspension or reduction of excise taxes on petroleum products.

Inflation quickens

Latest data from the Philippine Statistics Authority (PSA) showed inflation accelerated to 4.1 percent in March, from 2.4 percent in February and 1.8 percent a year earlier—the quickest rate in nearly two years, since July 2024, when it reached 4.4 percent.

PSA chief Claire Dennis Mapa said transport costs were the main driver of inflation.