Marcos to decide on fuel excise tax cut or suspension by April 13

MANILA, Philippines — President Ferdinand Marcos Jr. may finally release a decision on whether to suspend or merely reduce excise taxes on fuel products on Monday, April 13, Palace press officer Claire Castro said on Sunday.

Marcos can only invoke his newly granted emergency power by April 12 or April 13 the earliest—the first day when Republic Act No. 12316 takes effect following the 15-day publication period on the Official Gazette.

The Development Budget Coordination Committee (DBCC) on April 7 submitted for Marcos’ approval its recommendation on whether to reduce or suspend excise taxes on gasoline, diesel and other fuel.

Malacañang, however, noted that Marcos’ decision would strike a balance between reducing the prices of fuel and the government’s income to continue its social programs and infrastructure projects.

The Department of Finance, however, warned that suspending the collection of excise tax on fuels from May to December would result in revenue loss of P136 billion.

READ: Marcos to decide on fuel excise tax after April 7 DBCC meeting

But even with fully slashing the excise taxes, the measure can only pull down the price of diesel by P6 per liter, while the price of gasoline, liquefied petroleum gas (LPG), and other petroleum products could be reduced by P10 per liter.

Any reduction or suspension of excise tax on petroleum products, however, will apply only to incoming fuel shipments and not to existing inventory.

Transport groups and other lawmakers have been calling the government to also suspend the 12-percent value added tax (VAT) of fuel products to further pull down their prices.

Economists, however, warned that reducing taxes should only be a temporary solution to address the problem as also suspending the VAT on petroleum products could widen the national deficit, reaching P360 billion in projected revenue shortfall.

READ: Marcos announces fuel price cuts, more government aid

On March 25, Marcos signed RA 12316, allowing the President to suspend or reduce fuel excise taxes if Dubai crude oil price reaches or exceeds $80 per barrel for one month, upon recommendation of the DBCC and in coordination with the Energy Secretary.

Dubai crude breached $80 per barrel as early as the first week of March. It peaked at $137.82 per barrel on March 20, before plummeting to $102.70 on April 9, following the announcement of the two-week, Pakistan-brokered ceasefire between the United States and Iran.

The law states that any suspension or reduction of fuel excise taxes can only last up to three months, but not more than one year in total. Excise taxes shall also automatically return to their original rates either one week after the one-month average Dubai crude oil price drops below US$80 per barrel.

The power of the President to temporarily suspend or reduce the excise tax on petroleum products shall only be exercised only until Dec. 31, 2028. /cb