Exporters support suspension of excise tax and VAT on fuel

THE Philippine Exporters Confederation, Inc. (Philexport) said it supports the suspension of excise tax and value-added tax (VAT) on fuel, noting that the measure would ease cost pressures for businesses and consumers.

In a social media post on Thursday, Philexport President Sergio R. Ortiz-Luis, Jr. said relieving the tax burden will help stabilize prices and maintain company competitiveness. 

“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,” he said.

President Ferdinand R. Marcos, Jr. on Monday announced the suspension of excise taxes on liquefied petroleum gas (LPG) and kerosene to cushion the effects of rising fuel prices, but maintained the levies on gasoline and diesel.

The reduction is equivalent to P3.36 per kilo of LPG or about P37 per tank and P5.60 per liter of kerosene, he said.

The group noted that fuel price reductions of as much as P6 per liter for diesel and P10 per liter for gasoline would mean savings for the country’s transport, logistics, and export industries.

Such an adjustment would also support micro, small and medium enterprises, whose operations are more sensitive to fuel price shocks, Mr. Ortiz-Luis said.

Diesel prices have settled at P100.05 per liter, coming down from their highs after the outbreak of fighting in the Persian Gulf on Feb. 28. Gas and kerosene costs rose by P52.30/liter and P82.40/liter, respectively.

Suspending VAT and excise tax collection on fuel would also help mitigate inflation, Mr. Ortiz-Luis said.

Rising prices hurt low- and middle-income households the most, he noted, with higher transport costs passed on to the price of basic goods like food and medicine.

Headline inflation accelerated to 4.1% in March — the highest in two years — driven by rising fuel and transport costs due to the fighting in Iran.

Philexport also noted that “broader economic benefits, including sustained business activity, preserved jobs, and stronger consumer demand, can help offset fiscal losses over time.”

The Department of Finance said suspending excise tax and VAT on fuel would result in foregone government revenue of about P136 billion.

“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,” Mr. Ortiz-Luis said. — Beatriz Marie D. Cruz