Suspending excise taxes on petroleum products would be felt most immediately by low-income households, according to Emmanuel Leyco, president and chief economist of Credit Rating and Investor Services Philippines.

In a Saturday radio interview, Leyco said removing fuel excise taxes would provide quicker relief to poorer sectors, despite concerns that the policy mainly benefits higher-income groups.

Fastest thing to ease burden on the public

“In my opinion, suspending the excise tax on petroleum products is the fastest thing the government can do. And that will help lessen the burden on the public when it comes to transportation,” he said in Filipino.

“In my simple analysis, a decrease in petroleum product prices would ease costs not only for public transportation but also for logistics, which drive up the prices of production inputs,” he added.

Ferdinand R. Marcos Jr. last month authorized the suspension of excise taxes on liquefied petroleum gas (LPG) and kerosene. Government officials said this translates to a P3.36 per kilogram reduction in LPG prices, or about P37 per tank, while kerosene prices would drop by P5.65 per liter.

No significant relief in suspending taxes in fuels

Finance Secretary Frederick Go said suspending taxes on gasoline and diesel — fuels most commonly used in daily commutes — would not provide significant relief, as any reduction in pump prices would be “marginal and largely offset by prevailing market dynamics.”

Leyco, who also serves as a fellow at the Centre for People Empowerment in Government, has argued in favor of suspending excise taxes on gasoline and diesel, noting that lower-income households often rely on these fuels for income generation.

“If you look at the petroleum being bought by the poor, they put it into jeepneys, tricycles… they use it for vehicles in public transportation,” he said.

P136 billion in foregone revenues

The Department of Finance earlier estimated that suspending petroleum taxes could result in P136 billion in foregone revenues. Meanwhile, Finance Undersecretary Karlo Adriano said the government stands to lose P43.6 billion from the three-month suspension of LPG and kerosene excise taxes.