DEPDev: Fuel excise tax suspension to slash oil prices by P6 to 10 a liter

The suspension on excise tax on petroleum products will reduce oil prices by P6 per liter for diesel and P10 per liter for gasoline, the Department of Economy, Planning, and Development (DEPDev) said on Monday.

DEPDev Undersecretary Rosemarie Edillon disclosed the figures during a briefing of various government agencies before the House ways and means committee.

This is amid at least five pending bills seeking to allow President Ferdinand Marcos Jr. to suspend or slash fuel excise taxes during emergency situations, such as the ongoing conflict in the Middle East.

One of the measures is House Bill No. 8292 of Speaker Faustino Dy III and Majority Leader Sandro Marcos, which seeks to authorize the President to suspend or reduce the excise taxes on petroleum products during national or global economic emergencies.

Edillion said the DEPDev has simulated the prices for two scenarios:

• The Dubai crude oil average cost will reach $98 or above $80 per barrel until April, and
• The worst-case scenario in which the average cost of Dubai crude oil will reach $140 per barrel due to the prolonged closure of the Strait of Hormuz where 20% of the world’s seaborne oil trade actually happens.

“We simulated the impact of an excise tax suspension. We know that for regular gasoline, its P10 pesos per liter. And then for diesel, P6 pesos per liter. With excise tax suspension under scenario 1, the average cost of diesel at P74.22 pesos per liter will go down to P67.50 per liter. And then for April, from P67.33, it could go down to P60.61,” Edillon said.

Gasoline, on the other hand, will be reduced from P70.20 per liter to P59 pesos per liter this March.

But for the second scenario, Edillion said the average diesel price – which will reach P96.76 per liter – will be down to P90.04 pesos per liter for March.

Average diesel prices are expected to taper down by April at P91.19 pesos per liter, which will be reduced to P84.47 with the suspension of fuel excise taxes, Edillon said. 

For gasoline under the second scenario, the average cost of P64.59 in April will go down to P53.39 per liter.

“In terms of incidence of the impact, of course, the effect on diesel users is greater on the lower income class, but there is also a spillover. Whereas, for gasoline, it’s more or less shared across. It’s almost uniform,” Edillon said.

HB 8292

Rep. Marcos said the bill seeks to amend the National Internal Revenue Code to give the President the authority, upon the recommendation of the Secretary of Finance and in coordination with the Secretary of Energy, to temporarily suspend or reduce excise taxes on fuel when extraordinary conditions drive global oil prices higher.  

The measure specifies conditions when the President may suspend or reduce excise taxes on fuel —if the average Dubai crude oil price reaches at least $80 per barrel for three consecutive months, or if a national emergency or calamity results in extraordinary increases in domestic pump prices.

According to the bill, any suspension may apply to specific petroleum products and will be effective for up to six months, subject to extension by Congress but not exceeding one year in total.

The measure also requires the President to submit a report to Congress within 15 days of issuing the suspension order, and monthly thereafter, detailing its basis, the estimated foregone revenues, and the expected impact on fuel prices and inflation."

"Rising fuel prices impose a disproportionate burden on the most vulnerable sectors of society, particularly farmers, fisherfolk, public transport operators, small enterprises, and low-income households whose livelihoods are directly affected by increases in petroleum costs," the bill said.

"In times of national emergency or sudden global disruption, the government must be equipped to act swiftly to mitigate the impact of these shocks and safeguard the welfare of the Filipino people," it added.

On Monday, Malacañang said Marcos will formally ask Congress for emergency powers to reduce the excise taxes on fuel products amid the Middle East conflict.

On Tuesday, motorists are in for another big-time fuel price hike – the ninth straight week of increases for gasoline and the 11th for both diesel and kerosene amid the ongoing tensions in the Middle East.

According to data released by the Department of Energy (DOE), retailers are set to increase prices per liter of gasoline by P7.00 to P13.00, diesel by P17.50 to P24.25, and kerosene by P32.00 to P38.50. — JMA, GMA Integrated News