House panel eyes approval of bill letting Marcos suspend fuel excise taxes this week

By Kenneth Christiane L. Basilio, Reporter

A HOUSE of Representatives committee will take up on Wednesday a proposal to suspend excise tax collections on petrol, a congressman said on Monday, seeking its swift approval to pave the way for plenary passage before Congress goes on a month-long break next week.

The House Ways and Means Committee will discuss measures to suspend excise tax collections on fuel products and is expected to pass them the same day, said Marikina Rep. Romero “Miro” S. Quimbo, who heads the panel, as lawmakers aim to quickly authorize President Ferdinand R. Marcos, Jr. to cut petrol duties and ease rising fuel costs that threaten to drive up living expenses.

“There will be a break next week and we won’t be able to pass it if we don’t finish it by Wednesday,” he told reporters in Filipino. “Unless an emergency session is called, the President will have no tools, equipment or weapons to address rising gas prices.”

“What we’re facing is economic contraction.”

Proposals to suspend or scrap petrol duties have gained traction in Congress as expected fuel hikes loom, with the Iran war entering its second week after initial US and Israeli strikes on Iranian targets throttled energy exports from the Middle East, home to five of the world’s top 10 oil producers.

The expanding war has severely disrupted global oil trade as energy shipments through the Strait of Hormuz remain subdued after Iran closed access to the critical chokepoint where roughly a fifth of the world’s oil and gas shipments pass, stoking concerns over the conflict and raising fears of higher living costs.

The Philippines is a net importer of oil and is highly sensitive to sharp fluctuations in global oil prices. About 98% of the country’s crude oil imports come from the Middle East, according to Department of Energy data.

Energy Secretary Sharon S. Garin said Philippine petrol companies have agreed to spread out fuel hikes this week, she told lawmakers at a congressional hearing.

Temporarily halting the collections of excise tax on fuel products would benefit the public, she said. “Any excise tax reduction is helpful.”

A 2017 law previously allowed the government to suspend the collection of excise tax on petroleum products when world oil prices reach $80 per barrel for three months, but the provision lapsed six years ago.

REVENUE LOSSES
Finance Undersecretary Karlo Fermin S. Adriano said suspending excise tax collections may lead to P136 billion in foregone revenue if implemented from May to December. The move could widen the government’s budget deficit and raise the country’s debt, according to a Department of Finance (DoF) presentation.

“This can be higher if we start in March or April,” Mr. Adriano told lawmakers.

Mr. Quimbo said revenue losses are inevitable under the proposal but argued the move must be taken despite the hit, warning that keeping the levy in place would continue to stoke price increases that threaten economic activity.

“It could be offset by value-added tax collections,” he said. The Finance department forecasts the government could collect an additional P16 billion if Dubai crude oil hits $80 per barrel, P25.4 billion at $85, P26.6 billion at $90 and P37 billion if prices reach $100 per barrel.

DoF data presented during the congressional briefing showed that the government collected an average of P116 billion in value-added tax from fuel products from 2021 to 2025.

“If you don’t do anything, it’s going to be worse,” Mr. Quimbo said. “If you don’t remove the tax, prices will climb even higher, and no one will buy commodities anymore, and taxes won’t be collected if that happens.”

The purchasing power of the Philippine peso could be shaved by P1 for every P100 if oil prices stay at $100 a barrel in March, Department of Economy, Planning, and Development (DEPDev) Undersecretary Rosemarie G. Edillon said, adding that scrapping the excise tax could soften the impact but would not be enough to offset the blow to consumer spending power.

“We recommended a full package of interventions to the President,” she told lawmakers, advising the need to conserve fuel and provide targeted subsidies for the agriculture sector.

The Iran war could also push inflation higher if hostilities persist, she added, noting that March inflation could range from 4.5% to 5.1% under the agency’s baseline projection and rise as high as 6.3% to 7.5% in its “extreme case” scenario.

April inflation could reach 4.5% to 4.8% under the agency’s baseline scenario and climb to 6.4% to 7.5% in its worst‑case projection, Ms. Edillon said. The full-year consumer price index could breach the 2%-4% target of the central bank, settling at 4% to 4.2% for its baseline projection, she said.

She added that DEPDev projected 2026 inflation could reach 4.5% to 4.8% under its worst‑case scenario.

Prices of electricity could increase by 16% if the Iran war persists, Ms. Edillon said. “That’s significant if this keeps on going and if we don’t intervene.”

She added diesel prices could climb to as high as P96.76 per liter this month under the agency’s worst-case scenario and P91.19 per liter in April. For its baseline scenario, diesel could hit P74.22 per liter in March and P67.33 in April.

Meanwhile, gasoline prices could reach P70.20 per liter this month and P64.59 in April under its baseline scenario, she added.

Ms. Garin said the Philippines is exploring direct talks with foreign governments and local oil companies are seeking alternative suppliers as the conflict in Iran enters its second week, noting that current stockpiles are sufficient to last until April.

The country’s petrol stockpile and inbound shipments could withstand weeks of disruption if unrest in the Middle East drags on, and the government is continually preparing to prevent shortages that could weigh on economic activity.

“We are hoping it’s just one more week,” Ms. Garin said, warning that a continuous fuel increase may affect economic output. “A price change of two weeks will have a longer effect on our economy because prices will readjust and fares will go up.”

US President Donald J. Trump has signaled that military action against Iran would continue “as long as necessary” to curb Tehran’s nuclear ambitions and pursue regime change. White House Press Secretary Karoline Leavitt on Saturday said achieving Washington’s objectives could take “four to six weeks.”

Ms. Edillon told BusinessWorld that DEPDev is updating its assessment of the Iran war’s impact on gross domestic product.

Meanwhile, Mr. Quimbo said he will also push for the regulation of the oil industry, which has been deregulated since 1988.

“What’s worrying is the lack of power of the government to try and control gasoline prices,” he said in Filipino. “I’m going to take it up with the House leadership so we can have a bipartisan initiative to bring it back.”

He said government agencies such as the Energy department have “no real power” to penalize oil companies profiting from higher oil prices.