Camarines Sur 5th district Rep. Migz Villafuerte has echoed the call of the House Legislative Energy Action and Development (LEAD) Council to suspend for two months the collection of value-added tax (VAT) on petroleum products.
Villafuerte, chairman of the House Committee on Information and Communications Technology, said such suspension would "relieve the burden of the now outrageous fuel prices, which, unless eased, could possibly shove as many 1.34 million to 3.5 million near-poor Filipinos into poverty".
Despite the "big-time" rollback on pump prices on Tuesday, April 21, fuel costs remain significantly elevated since late February or just before the United States (US) and Israel jointly attacked Iran.
Villafuerte says he superficially supports the call of LEAD Council presiding officer Marikina City 2nd district Rep. Miro Quimbo “to put off for two months the collection of VAT on petroleum products, to give Filipinos a badly-needed respite from the rocketing pump prices of diesel and gasoline".
"I agree with Rep. Miro that a two-month VAT suspension is feasible, in light of the projected P20 billion windfall profits that the government has thus far collected from the outrageously high diesel and gasoline prices at the pump after the US-Israel joint attack on Iran began nearly two months ago,” said Villafuerte, whose committee was part of the 13-panel energy crisis council.
Villafuerte explained that a substantial and quick reduction of fuel prices was necessary to prevent a spike in the country’s poverty rate, given that the government think tank Philippine Institute for Development Studies (PIDS) projects as many as 1.34 million to 3.5 million more Filipinos could become poor due to the fuel price shocks.
He noted that based on its policy note on “a simulation of current oil price conditions", the PIDS said the national poverty rate could rise from 13.2 percent in 2025 in 14.4 percent this year—translating into another 1.34 million Filipinos becoming poor—should the cost of crude oil be at $105 per barrel and a pass-through rate of 35 percent to domestic prices.
Moreover, the PIDS study said that 2.35 million more Filipinos could become poor if oil prices rise to $125 a barrel, and a bigger number of 3.5 million Filipinos could fall into poverty, if crude goes even higher at $145 a barrel.
This will “(reverse) recent gains” in the government’s poverty reduction efforts, said the PDIS study, because the most vulnerable to becoming poor are those coming “largely from households just above the poverty line—the so-called near-poor—who are most at risk of slipping into poverty as daily expenses rise".
Poor families are the hardest hit by faster inflation resulting from the higher costs of fuel and other expenses because, as per the PIDS study, they are the ones who spend most of their income on essentials and have little to no savings at all, Villafuerte has said.
From a per-barrel average of $60 to $70 for crude oil at the onset of 2026, global prices soared to $110 to $120, and even peaking briefly at $128, after the US-Israel joint air strikes on Iran started on Feb. 28.
From a pre-war average of P48 to P65 per liter of diesel and P49 to P63 for gasoline, pump prices peaked in Metro Manila at P110 to P150 for diesel and P82 to P105 for gasoline.