BBM scraps LPG, kerosene tax
‘If we remove the VAT on petroleum products, it will mainly benefit the oil market.’
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‘If we remove the VAT on petroleum products, it will mainly benefit the oil market.’
President Ferdinand Marcos Jr. on Monday announced the lifting of the excise tax on liquefied petroleum gas (LPG) and kerosene — two key household fuels — as part of government efforts to cushion the economic impact of the ongoing Middle East conflict.
“Under the authority granted by law, I have removed the excise tax on LPG and kerosene. This translates to a P3.36 reduction per kilo of LPG, or about P37 per tank. Kerosene will also go down by P5.65 per liter. This means lower costs for cooking and daily needs,” the President said in a Palace briefing.
Marcos, however, said the excise tax on gasoline and diesel will remain for now, pending discussions with the Unified Package for Livelihoods, Industry, Food and Transport (UPLIFT) committee on 14 April.
On calls to cut the value-added tax (VAT) on fuel, the President pushed back, saying that higher global oil prices actually increase government revenues.
“Because of rising crude prices, importations at current VAT rates generate additional funds. If we remove the VAT on petroleum products, it will mainly benefit the oil market. What we need is funding that supports the entire society,” he said.
“We can’t focus only on petroleum. People are asking why only the transport workers are being helped. What about other sectors? We also need to take care of everyone’s welfare,” Marcos said.
He said VAT collections will be used to fund subsidies and cash assistance programs.
“That additional funding will not exist if we remove the VAT on petroleum products. That is the reasoning,” he explained.
Still, he clarified that reducing the VAT remains an option under review.
“There is nothing we are not considering as a possible option. If the time comes that the VAT should be reduced on certain products, we will study it carefully. For now, the cost-benefit analysis still favors collecting VAT and using it to support the public,” he said.
Last month, Marcos signed Republic Act 12316, which allows the suspension or reduction of the fuel excise tax once global oil prices hit a threshold — set at $80 per barrel for Dubai crude over one month. As of 13 April, crude prices have exceeded $103 per barrel based on WTI futures.
Food supply, farmer support
Amid the stalled US-Iran peace talks, Marcos assured the public that the food supply remains stable.
“Let’s not worry. We have a sufficient supply of basic food — rice, corn, vegetables, sugar, fish, meat, chicken, eggs and other products,” he said.
To address the falling farmgate prices due to oversupply, the President said he has ordered the Department of Agriculture to purchase the excess produce.
“We are seeing farmers forced to throw away their harvest due to very low buying prices caused by oversupply. We will not allow this to continue. The DA will buy the excess production, and we will work with local governments so these can be distributed to communities,” Marcos said.
“The government will absorb the surplus so harvests won’t go to waste, farmers won’t incur losses and consumers will benefit,” he added.
He also announced the expansion of the “Benteng Bigas Meron Na” program nationwide.
“We will increase the number of outlets and extend selling hours, especially for senior citizens, persons with disability and single parents,” he said.
LPG demand drops in summer
Meanwhile, former LPG Marketers Association representative Arnel Ty said LPG consumption in the Philippines typically declines during the summer months.
“When conflicts in the Middle East begin, the impact on LPG consumers is not that significant. Our LPG consumption dropped by 30 percent because many users, especially in the provinces, shift to charcoal and firewood,” he said.
Ty noted that LPG demand usually falls by around 15 percent during summer, and the timing of the Middle East conflict — which began on 28 February — coincided with the seasonal slowdown.
“From March to mid-June, demand is lower because of the summer season,” he said.
He said LPG use remains uneven across regions: about 65 percent of households in Luzon use LPG, compared to 25 to 30 percent in the Visayas and just 15 to 20 percent in Mindanao.
The country’s normal monthly LPG consumption is around 150,000 metric tons, but this has dropped by 30 percent, with the current supply inventory at 40 to 45 percent, including stocks in transit.
Ty said that following the latest price adjustments, the industry is implementing a P3 excise tax component as previously scheduled.
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