Department of Finance: PH to lose PHP 50B if fuel excise tax is suspended

Last month, President Ferdinand “Bongbong” Marcos, Jr., urged lawmakers to grant him emergency powers to suspend or reduce excise taxes on fuel, citing the impact of the US-led conflict in the Middle East on local energy supply.

Under current law, fuel products are already heavily taxed, with excise duties set at PHP 10/L for gasoline and PHP 6/L for diesel, on top of the government’s 12% Value Added Tax (VAT).

Republic Act No. 12316 was signed into law on March 25 and took effect on April 9, granting the President the authority to suspend or reduce fuel excise taxes. Despite this, questions have been raised on why the tax relief has yet to be implemented, which could provide relief to broader gasoline and diesel users.

According to the Department of Finance (DOF), suspending fuel excise taxes would result in an estimated PHP 50 billion government revenue loss.

“What we’re saying is, for example, if we remove the excise tax on diesel, most of those who pay excise tax, based on consumption, are the ones who consume the most and therefore pay the most tax, and these are the wealthiest individuals… So, if we remove this, that’s PHP 50 billion, meaning we would have PHP 50 billion that could no longer be provided as assistance to vulnerable and middle-income groups,” said Finance Undersecretary Karlo Fermin Adriano.

Usec. Adriano added that the government would continue extending support beyond the poorest households, noting that assistance for the middle-income sector is already being discussed under the UPLIFT Program, and that recommendations and policy options are currently under review.

On April 13, the President ordered the suspension of excise taxes on LPG and kerosene, providing relief equivalent to PHP 3/kg for LPG, and PHP 5/L for kerosene for households and industries that rely on these fuels.