Marcos wants ‘special powers’ to lower fuel taxes

President Ferdinand R. Marcos, Jr. on Tuesday said he might seek “special powers” to temporarily lower the excise tax on petroleum products, as the Middle East war threatens to trim the Philippines’ economic growth this year.

At a news briefing, the President framed the possible tax relief as a direct measure to ease the burden on Filipino consumers, who are already feeling the impact of higher fuel costs.

“We are discussing [with lawmakers], and it could be helpful to give the President the authority to reduce the excise tax on petroleum products should Dubai crude exceed USD 80,” Mr. Marcos said. “We’re not yet there. But if that happens, then maybe this is one tool that we will have.”

Mr. Marcos said he will discuss the proposed lower excise tax with Congress leaders, adding that it will only be a temporary measure.

“It is not going to be a permanent measure. It will be something that we will dispose of as soon as the crisis is over,” he said.

Finance Secretary Frederick D. Go said the economic team will work with Congress to give the President the authority to temporarily cut excise taxes on fuel if Dubai crude oil breaches the USD 80-per-barrel level.

“To be clear, this does not mean the authority will be automatically exercised. It is a precautionary measure — a ready policy tool that the President may use, if necessary, to act swiftly in protecting Filipino consumers and safeguarding the broader economy,” Mr. Go said in a statement.

Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, excise taxes on all oil and fuel products were increased in three tranches from Jan. 1, 2018 to Jan. 1, 2020.

The TRAIN law also automatically suspends the excise tax on petroleum products if the average price of oil in the global market reaches USD 80 per barrel in the next three months.

The Philippines imports its oil mostly from the Middle East, making it vulnerable from geopolitical tensions that would impact domestic prices upward should they persist.

Growth at risk?

At the same time, Mr. Go told reporters the conflict could shave off as much as 0.25 percentage point (ppt) from the country’s economic output this year, highlighting the broader fallout of rising oil prices and global uncertainty.

Mr. Go said they are closely monitoring movements in global oil prices and the duration of the conflict and the possibility of sustained higher oil prices.

US President Donald J. Trump earlier said the war could last four to five weeks but may extend far longer.

“In one scenario that was looked at, I think there’s an impact on GDP (gross domestic product) of between 0.1 [ppt] and 0.25 [ppt],” he said.

According to Mr. Go, there is no need to revise this year’s 5-6% GDP growth target for now, noting global oil prices are currently around USD 76 to USD 78 per barrel.

Growth targets could be revised if oil prices rise to around USD 85 per barrel, he added.

Suspension of excise tax

Meanwhile, legislators are backing calls to suspend the collection of excise tax on fuel products.

“Now is the time to prepare before prices surge further,” Marikina Rep. Romero “Miro” S. Quimbo, who heads the Committee on House Ways and Means, said in a statement. “Congress must immediately pass a measure authorizing the President to suspend excise tax on fuel during extraordinary circumstances.”

Mr. Quimbo filed House Bill No. 8257 which seeks to grant the President authority to suspend or reduce excise taxes on petroleum products during national or global emergencies. However, it proposed that any suspension or cut in the fuel excise tax rate should be effective for a maximum of six months, unless extended by lawmakers through a joint congressional resolution.

The bill requires the President to submit to Congress within 15 days of issuing a suspension order a “factual basis” for halting or cutting excise taxes, including estimates of foregone revenue and the impact on inflation, fuel prices and economic activity.

Navotas Rep. Tobias Reynald M. Tiangco filed a joint congressional resolution that would allow Mr. Marcos to temporarily halt the collection of value-added tax (VAT) on fuel products.

At the Senate, Senator Emmanuel Joel J. Villanueva filed Senate Bill No. 1922 that seeks to provide the President with powers to suspend or reduce excise tax on gasoline and diesel once the average price of crude oil exceeds USD 80 per barrel.

Under the bill, the President can suspend or reduce the excise tax on fuel through an executive order, upon the recommendation of the Energy and Finance secretaries.

The bill also provides for the automatic lifting of the suspension once global oil prices stabilize.

Senator Paolo Benigno “Bam” Aquino IV also filed Senate Bill No. 1923, which proposes to suspend the excise tax imposed in cases of national emergencies or when public interest requires it.

Senate Finance Committee Chair Sherwin T. Gatchalian expressed concern that the suspension of excise tax collection on petroleum products could hurt revenue collection, and impact economic growth.

He estimated the government may forego around PHP 30 billion a month in revenues or around PHP 300 billion in annual revenues due to the measure.

“If the option is to remove excise tax, there will be a lot of losses. My worry is that we’re coming from a slow growth. Maybe we won’t reach the target growth,” Mr. Gatchalian told reporters.

Secure oil supply

Meanwhile, Mr. Marcos said the Philippines has ample energy supply but urged the public to lessen energy use.

Mr. Go said the country’s oil supply is secure, as it has the flexibility to source from other oil-producing states.

“The Philippines maintains an adequate oil buffer equivalent to approximately 50 to 60 days of national demand, providing a cushion against short-term price volatility,” he said.

The President said he will also direct government agencies to minimize their energy use.

“We have given instruction to all government offices to find ways to save on energy. That applies — this is my call to the people as well — let’s find a way to reduce our use of all our sources of energy,” Mr. Marcos said.

Also, Mr. Marcos urged for restraint from all parties but noted the Philippines is only “tangentially” involved due to the number of Filipinos in the region.

“Let’s hope that there is a ceasefire, and we, the Philippines, ask all parties to show restraint and to bring this to a close as quickly as possible,” he said.

The Middle East is home to over 2.4 million migrant Filipino workers, who send a steady stream of remittances that is an important component of the Philippine economy. — Chloe Mari A. Hufana, Reporter with Kenneth Christiane L. Basilio and Adrian H. Halili