Exporters push fuel VAT suspension

Philippine exporters are backing a proposal to suspend value-added tax on fuel, arguing that easing energy costs could help stabilize prices and sustain business activity amid persistent inflation pressures.

Philippine Exporters Confederation Inc. (PHILEXPORT) said high fuel prices continue to ripple across the economy, raising production, transport, and logistics expenses that weaken the competitiveness of local industries, particularly exporters.

PHILEXPORT president Sergio R. Ortiz-Luis Jr. said removing VAT on fuel, even temporarily, would provide immediate relief for companies and households.

“Fuel is a fundamental input across industries. Reducing the tax burden on fuel will have a cascading positive effect, lowering operational expenses and ultimately stabilizing prices of goods and services,” Ortiz-Luis said.

The group expressed support for a legislative proposal led by Loren Legarda, which seeks to suspend VAT on fuel products as a short-term response to rising costs.

Industry estimates suggest the measure could cut pump prices by as much as P6 per liter for diesel and P10 per liter for gasoline, easing expenses for transport and logistics firms. Previous tax adjustments have also delivered savings for households, particularly on kerosene and liquefied petroleum gas.

Exporters said the move could help contain inflation by limiting the pass-through of higher fuel costs to essential goods such as food and medicine, which tend to hit low- and middle-income households the hardest.

While the Department of Finance has warned of potential revenue losses reaching P136 billion from foregone taxes, business groups argue that the broader economic benefits may offset the impact. These include stronger demand, preserved jobs, and continued operations among micro, small, and medium enterprises.

“Targeted, time-bound relief measures such as the suspension of VAT on fuel are critical to safeguarding economic momentum, supporting exporters, and protecting Filipino consumers from further price shocks,” Ortiz-Luis added.

The group urged policymakers to act on the proposal, saying timely intervention is needed to balance fiscal concerns with the need to support growth and ease the burden on businesses and consumers.