Philippines Considers Fuel Tax Suspension Amid Oil Price Surge

MANILA, Philippines – The government is now considering another round of fuel excise tax relief after the Department of Energy (DOE) certified that Dubai crude oil prices have breached the legal threshold, as officials warned that pressure on global oil markets may persist. The DOE said the average Dubai crude price reached $99.41 per barrel from August 13 to September 11, well above the $80-per-barrel trigger under Republic Act No. 12316. The agency has transmitted its certification to the Development Budget Coordination Committee (DBCC), putting possible excise tax reductions or suspensions formally on the table. The development comes as another large fuel price hike took effect Tuesday, September 15, with gasoline rising by P5.68 per liter, diesel by P4.31, and kerosene by P4.62. Together with the previous week’s adjustments, pump prices have risen by P10.37 per liter for gasoline, P9.49 for diesel, and P10.20 for kerosene in just two weeks. DOE officials said the latest increase was driven largely by more expensive imported fuel. The average import cost of diesel rose by nearly $10 per barrel over the past two weeks, while the peso weakened by around 12 centavos against the US dollar, adding further pressure to local prices. The DOE said the P4.31 diesel increase reflected those factors together with the corresponding value-added tax. Energy Secretary Sharon Garin warned that consumers may have to contend with elevated prices for longer as the conflict in the Middle East continues. “Let’s brace ourselves for possible increases pa rin (still),” Garin said. “Wala pang signs ngayon na babagsak pa yung presyo ng oil (There are no signs that the price of oil will drop).” Garin said the DOE does not expect the extreme P20- to P30-per-liter jumps seen at some points of the crisis, but prices could still rise in smaller increments. She earlier said the department’s assessment was that the Middle East conflict “will stay for a long time.” The continued surge has put further pressure on public transport workers. Transport group Manibela launched a two-day strike on Monday, September 14 and 15 (Tuesday), calling for stronger government intervention as higher diesel prices eat into drivers’ earnings. Garin noted that prolonged fuel subsidies can become costly, pointing to other countries that have begun considering cuts as funds are depleted. In the Philippines, however, the government is continuing its targeted subsidy for qualified PUV drivers. As of September 13, P753 million had been distributed to qualified PUV drivers, covering 103,163 vehicles through 3,612 participating gasoline stations. The subsidy currently provides P12 per liter, up to P1,800 per week, for qualified drivers. On the excise tax break, breaching the $80 threshold does not automatically trigger the suspension. The DBCC must decide whether intervention is warranted, whether taxes should be reduced or fully suspended, and which petroleum products should be covered. The government last used the mechanism in April, when President Ferdinand Marcos Jr. temporarily suspended excise taxes on LPG and kerosene. Gasoline and diesel were not included in that round of relief. – Rappler.com