Marcos eyes power to reduce excise tax on fuel if crude exceeds $80 a barrel

President Ferdinand "Bongbong" Marcos Jr. on Tuesday said he would talk to congressional leaders to give him the authority to reduce excise taxes on petroleum products once the price of Dubai crude exceeds $80 per barrel. 

Marcos made the remark during a press conference about the government's efforts amid the ongoing tension in the Middle East. He said this would only be an emergency measure for immediate disposal once the conflict in the region is over.

"I am going to talk to the leaders in both the House and the Senate to... this is not yet a sure thing but this is something that we're discussing and maybe helpful is to give me, the President, the authority to reduce excise tax on petroleum products should Dubai crude exceed $80 per barrel," the President said.

"Wala pa tayo doon but in case that happens, then maybe this is something... this is what tool that we will have to have," Marcos said.

In an interview with reporters, Acting Finance Secretary Frederick Go likewise said the emergency powers for the President would be sought should the crude prices continue to rise.

"The possible emergency powers that we might seek for the President to react is if the price of Dubai oil exceeds $80 per barrel," Go said.

Just a shade under $80

Energy Secretary Sharon Garin, in a press conference on Tuesday, said the global price of Dubai crude was already hovering at about $79 a barrel—just a shade under the $80 mark.

Marcos also expressed confidence that the country's oil supply remains adequate in the face of the ongoing Middle East conflict.

"Let me assure everyone that we have a sufficient supply of oil. (We have the) stockpile that are approximately 50 to 60 days… in terms of gasoline, fuel oil, and in terms of kerosene," the President said.

"Let me immediately allay the fears of everyone that our supply of oil-derived products, oil products... even fertilizer is something that we have to look at. We have sufficient supply," he added.

On the proposed authority for the President to reduce the excise tax on fuel, Garin said, “We have to wait for the advice of Congress.”

“We will wait for the economic managers on how they will decide on this,” she added.

In a separate statement, Go said the economic team would work with Congress to secure authority for the President to temporarily reduce excise taxes on fuel should the price of Dubai crude oil exceed $80 per barrel. 

“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,” Go said.

Targeted subsidies

Meanwhile, the Philippine government will also offer targeted subsidies for certain sectors such as transport and agriculture, Marcos said.

"As soon as oil prices breached $80 per barrel, mayroon na tayong gagawin and we will use several of the funds. We will use the funds," Marcos said.

(As soon as oil prices breach $80 per barrel, we will take action and use several of the funds. We will use the funds.) 

"We are also trying to look at the possibility of easing the transport costs' burden to workers, for the traveling public, providing maybe no fare bus rides along major routes," Marcos said. 

Staggered increases

According to Marcos, there has been coordination between the Department of Energy and the oil companies that "whatever price increases they are going to institute, that they be done in a staggered manner." 

Earlier, the Department of Energy - Oil Industry Management Bureau (DOE-OIMB) said that fuel prices could jump by up to ₱10 per liter amid the US-Iran conflict.

The DOE is already coordinating with the Department of Transportation (DOTr) and the Department of Agriculture (DA) regarding the possible release of fuel subsidies.

Fuel subsidies may be triggered if Dubai crude averages at least $80 per barrel for one month.

Support from House leadership

In the House of Representatives, several congressmen on Tuesday expressed support for moves that would allow Marcos to suspend excise taxes on fuel amid the ongoing conflict between US-Israel and Iran that has affected Gulf states. 

Speaker Faustino "Bojie" Dy III of Isabela said the House of Representatives stands ready to provide assistance to the President to implement measures to aid the public once oil prices breach US$80 per barrel.

"Bukas ang Kamara na makipag-ugnayan sa Senado upang pag-aralan at, kung kinakailangan, amyendahan ang batas upang mabigyan ang Pangulo ng sapat na kapangyarihan na maibaba ang excise tax sa mga panahong may matinding pagtaas sa presyo ng langis," Dy said.

(The House of Representatives is open to working with the Senate, and if need be, amend existing laws to give the President the power to reduce excise taxes when oil prices are very high.) 

"Kasabay nito, suportado rin natin ang panawagan na ang lahat ng tanggapan ng pamahalaan ay magsagawa ng mga konkretong hakbang upang makatipid sa paggamit ng kuryente. With the uncertainty in the Middle East, everyone must contribute to energy conservation efforts. Kasama po ang Kongreso dito," Dy added.

(We also support the President's call to implement steps to save power.)

As this developed, Representative Tobias Tiangco of Navotas City called for the suspension of the excise tax on fuel under House Joint Resolution 4, while Representatives Miro Quimbo of Marikina City and Sarah Elago of Gabriela party-list made similar calls regarding the levy in separate statements.

"There is an ongoing conflict involving Iran, Israel, and the United States of America (USA) in the Middle East, resulting in casualties and loss of life while Iran is a member of the Organization of the Petroleum Exporting Countries (OPEC). The conflict poses a threat to global oil supply and market stability," Tiangco said.

"The continuing conflict is expected to cause significant increases in fuel prices, which will in turn also affect the price of basic commodities. It is imperative for the national government to safeguard the welfare of the Filipino people by mitigating the economic impact of volatile fuel prices. A temporary suspension of the Value-Added Tax (VAT) on fuel products is necessary to help consumers cope up with the undue economic burden during the period of conflict," Tiangco added.

Congress' nod

House ways and means panel chairperson Quimbo agreed that suspending the excise tax on fuel will protect consumers amid escalating tensions in the Middle East and the strong possibility of rising global crude oil prices. She noted, however, that the President will need congressional support to make such suspension happen.

"This cannot be done through executive action alone. Under existing law, the President will need the authority from Congress to suspend the fuel excise tax. Therefore, Congress must immediately pass a measure authorizing the President to suspend the excise tax on fuel during extraordinary circumstances, subject to clear and measurable triggers," Quimbo said in a statement.

“Now is the time to prepare before prices surge further,” he added.

Elago, who also serves as House assistant minority leader, said the government should not let the oil firms to justify price hikes with "the US-Israel-instigated conflict in the Middle East."

"The continued imposition of excise taxes under the Tax Reform for Acceleration and Inclusion (TRAIN) Law and the 12% VAT on oil products only worsens the impact of global price volatility on consumers. At a time when wages remain low and inflation continues to erode household incomes, the government must act decisively," Elago said.

"Scrapping the excise tax and VAT on oil is an urgent and concrete measure to provide immediate relief to the public,” she added. — with a report from Ted Cordero/ VDV, GMA Integrated News