Senators are now seeking to grant the President authority to suspend or reduce taxes on petroleum products during times of global oil supply disruptions due to external shocks.

Sen. Francis “Chiz” Escudero and Sen. Francis “Kiko” Pangilinan each filed separate bill empowering a sitting president to reduce excise and value-added taxes on petroleum products when the global cost of oil breach specific thresholds due to various factors in order to protect consumers.

Escudero filed Senate Bill No. 1938 amid the anticipated surge in oil prices due to the ongoing tensions in the Middle East and global crude oil prices have been rising sharply due to the US-Israel war on Iran. 

The senator noted that Brent and West Texas Intermediate (WTI) crude are above $90 per barrel, while Dubai crude is already nearing $80 per barrel.

“These developments have driven home a hard truth: as a net importer of crude oil, the Philippines remains highly vulnerable to external oil shocks and the inflationary pressures they trigger on transportation costs, electricity rates, and the prices of basic goods,” Escudero said.  

Escudero said the bill provides for an innovative “flexibility clause,” which allows the President to implement oil tax cuts even before the barrel price threshold is breached. 

This shall take effect during times of extraordinary supply disruptions, geopolitical crises, or force majeure events, once certified by the secretary of the Department o Energy (DOE).

Meanwhile, in filing Senate Bill No. 1940, Pangilinan seeks the need to amend Section 148 of the National Internal Revenue Code of 1997, which currently states that the recommendation for an excise tax suspension will depend on the Development Budget Coordination Committee (DBCC) in consultation with the Department of Finance (DOF).

Pangilinan said granting the President the continuing authority to suspend or reduce fuel excise taxes during extraordinary circumstances would enable a timely policy response to exceptional oil price volatility and mitigate its impact on Filipino consumers.

“Such measure would support timely relief, help ease inflationary pressures, and reduce cost burdens on Filipino consumers, particularly farmers, fisherfolk, transport workers, and small businesses,” Pangilinan stated in the explanatory note of SB No. 1940.

The proposed amendment seeks to authorize the President to temporarily reduuce or suspend fuel excise taxes upon the recommendation of the DBCC and in consultation with the DOE.

Pangilinan’s bill also provides that the suspension or reduction must be lifted when the crisis is no longer present.