The pending suspension of the excise tax on petroleum products will help, but it won’t be enough to keep the economy afloat in the face of the energy crisis stemming from the Middle East conflict, an economist warned Saturday. 

Institute for Economic Development and Econometric Analysis, former president Alexander Escucha, maintained that the temporary lifting of the excise tax will not ultimately resolve the rising costs of fuel and essential commodities, given the country’s heavy dependence on oil imports.

Because of this, pump prices in the Philippines are primarily driven by the global market, and any disruption could trigger a price spike. Unlike the Philippines, he said Malaysia and Indonesia are oil-producing countries, so they have control over fuel prices.

“This [excise tax suspension] will only help a little, and it won't be permanent because, unlike our neighbors, such as Malaysia and Indonesia, they are oil producers, so they don't export,” he stated in Filipino in a radio interview. 

The Department of Energy cannot control skyrocketing fuel prices because the oil industry has been deregulated since 1998 under the Oil Deregulation Act (RA 8479). 

This law liberalized the downstream industry and removed government control over the pricing, importation, and export of petroleum products, promoting free competition.

Prior to its enactment, petroleum prices were set by the Energy Regulatory Board based on global oil costs and exchange rates, with the Oil Price Stabilization Fund absorbing fluctuations to prevent changes in pump costs.

Several bills seeking to repeal this law have already been filed in Congress, an ambitious attempt to stabilize, if not lower, the costs of petroleum. 

According to Escucha, although President Marcos Jr. could immediately suspend the excise tax, which could lower diesel prices by at least P6 per liter, it would not fully protect the consuming public from rising prices unless the oil industry is regulated.

“What will happen is, because we deregulate the oil, any movement in the global market will really affect us,” he pointed out.

Marcos has not yet suspended the excise tax after two weeks since RA 12316, which grants him special powers to do so, was passed into law.

Malacanang said Marcos may decide on it on 7 April following a meeting with his economic managers, but there has been no significant update to date. 

This prompted several lawmakers from both chambers of Congress to criticize the government’s delayed implementation of the excise tax suspension. 

Some senators have called for suspending the value-added tax on top of the excise tax to cushion the socio-economic effects of the oil crisis for consumers and crucial sectors such as transport, agriculture, and fisheries. 

The Department of Finance earlier warned that suspending the excise tax could cost the government a staggering P121.4 billion in revenue loss, though the projected shortfall could reach as high as P136 billion if coupled with the proposed suspension of the value-added tax. The estimated revenue foregone covers only eight months, from May to December.