A University of Asia and the Pacific (UA&P) economist is backing calls to temporarily suspend fuel excise taxes, seeking to shield the Philippine economy from potential oil price shocks as Middle Eastern tensions threaten global energy markets.

On the sidelines of "The Iran War: Bombs and Consequences" forum, UA&P professor and economist Cid Terosa said a moratorium on the levy could shave as much as 0.38 percentage points off the headline inflation rate.

Terosa noted that such an intervention would effectively halve the potential contribution of fuel costs to consumer price growth during a crisis. The Philippines remains highly vulnerable to external volatility despite localized mitigation efforts, he added.

The proposal comes as the Department of Economy, Planning, and Development warns that inflation could breach the government’s two percent to four percent target range. Without decisive government intervention to address looming price hikes at the pump, officials fear inflation could accelerate beyond five percent.

While critics often argue that cutting fuel taxes is a regressive policy that primarily benefits car owners, Terosa countered that the move serves as critical stabilization tool for the broader population.

He explained that while the immediate relief is visible for private motorists, the secondary effects would trickle down to the commuting public through lower transport fares and reduced logistics costs for essential goods.

The policy debate has created a rift among economic managers as the government weighs fiscal health against consumer protection. The Department of Finance (DOF) estimated that the total removal of excise taxes on petroleum products would result in a revenue loss of approximately ₱136 billion. This potential hole in the national budget is a primary concern for treasury officials tasked with maintaining the country’s fiscal deficit targets.

Meanwhile, the Department of Energy (DOE) has expressed openness to a more limited, short-term tax withdrawal.

Energy officials are advocating for a calibrated approach that mitigates the immediate burden on consumers while shortening the duration of the tax holiday to minimize the impact on state revenues.

As global oil prices remain volatile, the administration is under increasing pressure to finalize a strategy that balances these competing interests.

For now, the UA&P economists maintain that the short-term loss in tax collection is a necessary trade-off to prevent an inflationary spiral that could dampen domestic consumption and stall economic momentum.