If the radical spikes in oil prices will linger in the months ahead, the suspension of excise taxes and possibly even value added tax (VAT) will be on the table as an agenda of the Marcos administration.

Senator Sherwin Gatchalian, who is the incoming chairman of the Ways and Means Committee of the Senate, said persistent high fuel prices will make suspension of excise taxes possible. “If this will be prolonged, if this will extend for the next 6-12 months then that (suspension of excise taxes) is on the table right now,” he said.

“I'm looking to suspend excise tax, possibly VAT if necessary. But I think excise tax is easier to administer than VAT. But on a matter of principle, I'm also open to looking at that if the situation gets prolonged,” Gatchalian added.

If the excise taxes for petroleum commodities will be temporarily scrapped, Filipino consumers can immediately benefit from pump price cuts of P10.00 per liter for gasoline; P6.00 per liter for diesel; and P5.00 per liter for kerosene products.

Apart from excise taxes, the fuel products retailed at the domestic pumps are also levied with 12-percent VAT. For this tax measure, the revenue take of the government increases as oil prices escalate.

Gatchalian opined “the fuel subsidies only help our public utility drivers. It only helps our fishermen in terms of direct subsidies; but the middle class is also being squeezed out -- because the middle class, they have their vehicles, they also have businesses that require fuel.”

He said the proposed suspension of the excise taxes for fuel will be an agenda that he will lodge in forthcoming Senate hearings and he will back recommendations with solid data.

“It’s better to talk about this in the hearing so it will be formal and we will get all the data together. I think the bottom line here is: we have to expect for the worst in a prolonged scenario,” the lawmaker stressed.

In Gatchalian’s view, with the sanctions enforced on Russian oil – primarily the embargo imposition of the European Union – international oil prices will likely be sustained at the level of $100 per barrel for a long time, therefore, there is that fervent need to pursue tax relief for the consumers.

“A lot of the policymakers in Europe are seeing that the sanctions might stay until President (Vladimir) Putin is there. So that's a very long time. So if you have sanctions in place, rest assured prices of international fuel will be elevated at around $100 per barrel -- and that's going to be very tough for a lot of our PUVs (public utility vehicles) and our middle class,” he noted.

Gatchalian added that “a lot of our economic managers were expecting a short-term, very quick aberration in the oil prices because everything will go back to normal, but it doesn't seem that way. It seems to me that the Ukraine crisis will be prolonged. I don't know when but definitely, it will be prolonged for until the end of the year probably.”

The single biggest geopolitical event that triggered astronomical rise in global oil prices is the chronic Russia-Ukraine war which started in February this year and there are no signs yet that it will be ending soon.

As of Wednesday trading, international benchmark Brent crude had fallen to $118 per barrel from last week’s $122 per barrel, but it remains to be seen if the trend will be sustained until the end of the week trading.