Senate President Francis “Chiz” Escudero is considering filing a bill that would grant standby authority to the Department of Finance (DOF) or the President to temporarily reduce oil taxes in response to global fuel price spikes triggered by geopolitical crises, such as the ongoing Iran-Israel conflict.

In a press conference on Wednesday, June 25, Escudero said he has long supported granting the DOF flexibility to lower the value-added tax (VAT) on petroleum products during periods of price surges. He explained that the 12 percent VAT, being a percentage-based tax, results in higher government revenue whenever global oil prices spike, placing an added burden on consumers.

“Babalikatin, papasanin ng sambayanan ‘yong malaking kita ng gobyerno samantalang wala naman ‘yon sa prinoject nilang kita para sa taong ‘yon (The public will shoulder the burden of the government’s large earnings even though those earnings were not part of the projected revenue for that year),” Escudero said.

He said that the proposed measure would allow the President or DOF to adjust the VAT or fix the excise tax rates on petroleum products without waiting for new legislation, but only under clearly defined conditions.

“Isa na sa ipa-file namin tiyak 'yong standby authority na nais naming ibigay sa DOF o sa presidente man na babaan 'yong value-added tax o i-fix 'yong excise tax (One of the bills we will definitely file is the standby authority we want to grant to the DOF or the President to reduce the value-added tax or to fix the excise tax),” Escudero said in an interview.

“Ang pagdedebatehan na lamang ay 'yong threshold amount (What remains to be debated is the threshold amount),” he added.

He said one option that would trigger the President's power is when oil prices reach $80 per barrel or based on a certain percentage deviation from the projected range of crude oil prices, which for 2025, was estimated at $40 to $60 per barrel.

Escudero also raised the issue of which benchmark to use in determining price surges: Dubai crude, traditionally used in government projections, or the Mean of Platts Singapore (MOPS), which he said may provide a more accurate gauge of actual market prices.

He pointed out that the original version of the TRAIN Law he proposed included a standby authority clause allowing the DOF to adjust VAT rates when needed. However, only excise tax adjustments were ultimately granted standby authority, and that provision expired in 2020.

Escudero also noted that while proposals to abolish the Oil Deregulation Law would surface each time there is a price hike, the clamor fades when prices fall.

Thus, he said, pushing for built-in mechanisms, like the standby authority, would allow targeted and timely interventions without dismantling market structures.