The Makati Business Club (MBC) is urging President Marcos to reconsider the use of emergency powers to suspend or reduce fuel excise taxes, warning that such a move would drain revenue essential for supporting vulnerable sectors.

In a statement on Wednesday, April 1, the business group said the suspension of excise taxes would run counter to the government’s efforts to ease the impact of rising fuel prices on consumers, given its limited fiscal space.

The MBC said this would “further erode the government’s ability to provide the short-term targeted assistance needed while other medium and long-term projects are being implemented.”

Marcos earlier signed Republic Act (RA) No. 12316, granting him the power to suspend or reduce excise taxes on petroleum products upon the recommendation of the Development Budget Coordination Committee (DBCC) and the Energy Secretary, if the Dubai crude oil price reaches or exceeds $80 per barrel for one month.

The potential suspension or reduction of the excise tax rate has not yet been implemented and remains under review.

The MBC said suspending excise taxes has the same effect as a broad fuel subsidy across all sectors, pushing demand higher at a time when oil supply is tight, as the war in the Middle East shows no signs of cooling.

“The companies we represent do not need subsidies–those should be directed to jeepney drivers, etc.–but we do need supply,” the business group said.

Instead of focusing on excise taxes, the MBC said the government should foster an efficient domestic market and pursue “enlightened regulation” to secure the necessary oil supply to meet the country’s demand.

Driven by the “imminent danger posed to the availability and stability of the country’s energy supply,” Marcos signed Executive Order (EO) No. 110 last month placed the Philippines under a state of national energy emergency.

The MBC said this declaration should encourage the government to mobilize resources and streamline responses, while putting the spotlight on longstanding structural issues in the country’s energy sector.

“Ultimately, this declaration should serve as a catalyst for deeper reforms that strengthen not only the country’s energy security but also other aspects of the economy, such as transportation, logistics, agriculture, and manufacturing, among others,” it said.

The business group said this crisis should prompt the country to expedite infrastructure projects, such as cold storage facilities and port upgrades, to lower the cost of agricultural products.

It also called for a modernization effort in the domestic logistics sector through the so-called national logistics digital backbone, in which empty returning trucks would be used to backhaul other goods, reducing transportation costs.

“There should be many other initiatives that the government and the private sector can work on together to make our economy more efficient and resilient,” the MBC said. “But all these will need funding, and foregoing the excise taxes will make it more difficult for the government to support all these needed initiatives/reforms.”

By enforcing transparent and consistent policies, the business group said the country would still be able to attract and retain the necessary investments to generate more jobs and grow the economy.

“Let’s use this crisis as an opportunity to effect and institutionalize the much-needed reforms, so we come out much stronger, and we can realize the full potential of our country,” it said.