Measure granting Marcos fuel tax powers headed to Palace

By Kenneth Christiane L. Basilio, Reporter

THE measure granting President Ferdinand R. Marcos, Jr. the authority to suspend the excise tax on fuel is headed to the Palace, after the House of Representatives on Wednesday adopted the Senate’s version as lawmakers race to give him powers to ease surging oil prices linked to the Iran war.

Lawmakers adopted Senate Bill (SB) No. 1982 via voice vote, fast-tracking its enactment into law by bypassing a joint congressional committee tasked with reconciling differences between the Senate and the House versions.

“It’s practically an exact copy of our bill,” Marikina Rep. Romero “Miro” S. Quimbo, who heads the House Ways and Means Committee, told BusinessWorld in a phone call. “We’re absolutely pressed for time, and going through a bicameral conference committee might unduly delay it.”

Senate President Vicente C. Sotto III told the Senate floor the proposal will be sent to Mr. Marcos for his signature.

Moves to ease duties on petroleum products come as lawmakers scramble to authorize the chief executive with powers to cut rising fuel costs, which risks fanning inflation and weighing on economic growth, as global crude prices remain elevated due to the US-Israel war on Iran.

The bill’s approval comes as the conflict stretches into its third week with no end in sight as the US and Iran show no desire to strike a deal, and as Tehran continues to retaliate with missiles and drone strikes following unprovoked US and Israeli air attacks on Feb. 28.

The war has raised global concerns that it could fuel inflation as vital oil and gas shipments from the energy‑rich region remain blocked at the Strait of Hormuz, a key waterway where a fifth of global supplies pass.

Under SB No. 1982, the President, at the recommendation of an inter-agency budget committee, may suspend or cut the collection of excise taxes on fuel if the average Dubai crude oil based on Mean of Platts Singapore benchmark reaches or exceeds $80 per barrel for a month.

The bill also requires the President to submit to Congress within 15 days of issuing such an order a “factual basis” for halting or cutting the excise tax of petrol, including estimates of foregone revenue and the impact on inflation, fuel prices and economic activity, with monthly reports to follow.

Oil companies will also submit monthly information on its cost components for the price of petroleum products to the Energy department.

The Senate and House proposals differ mainly in duration and automatic triggers. The Senate bill limits the President’s power to three months, while House Bill No. 8418 allows a six-month suspension. Extensions cannot last for more than a year.

“It’s the same thing,” Mr. Quimbo said. “It doesn’t really matter because in three months, it’s again extendable for another period.”

The Senate measure also includes a safeguard that automatically restores the excise tax reductions once the average Dubai crude price falls below $80 per barrel, a condition absent from the House version.

“The suspension of the excise tax on fuel will not stabilize oil prices, which are volatile due to the Middle East war, but will only partially alleviate the pain caused by escalating oil prices,” Foundation for Economic Freedom President Calixto V. Chikiamco said in a Viber message.

He added that the potential effects of any cuts or suspension in fuel excise tax may only range from P10 for gasoline and P6 for diesel.

“It would also reduce much needed government revenue, which could have funded additional schools or infrastructure,” Mr. Chikiamco said.

Finance department estimates showed suspending excise tax collections could result in P136 billion in foregone revenue, which may further widen the government’s budget deficit and raise the country’s debt.

Suspending the fuel excise tax could slightly temper pump prices, Philippine Chamber of Commerce and Industry Chairman Emeritus George T. Barcelon said.

“I think it will slightly mitigate the price of oil for consumers,” he said in a phone call, noting that oil prices dictate market costs across products.

He said the government should consider reallocating funds from “non‑priority” state programs in the 2026 budget.

“Maybe they can repurpose some of this to help people meet their needs amid the crisis,” said Mr. Barcelon. “But all of this assistance extended must be on conditionality of the situation.”

“It would be better if this was implemented early, if the President was given emergency power earlier,” Mario “Mar” S. Valbuena, chairman of transport group Manibela, said in a phone call in Filipino. “The war has been going on for three weeks.”

He said lawmakers should consider reviewing a 28-year-old law that liberalized the downstream oil industry, while also scrapping the value-added tax on fuel. “That would be a big help,” he said in Filipino.

The Philippines imposes an excise tax of P10 per liter on gasoline, P6 per liter on diesel and P5 per liter on kerosene under the 2017 Tax Reform for Acceleration and Inclusion law. It previously allowed the government to suspend the collection of excise tax on fuel when world oil prices reach $80 per barrel for three straight months, but that provision lapsed six years ago.