Economic team seeks emergency power for Marcos to cut oil taxes

A gas station attendant fills up a motorcycle in Quezon City on Tuesday, March 3. With Middle East tensions blocking the critical Strait of Hormuz, the government’s economic team is moving to grant President Marcos Jr. the power to reduce fuel taxes once Dubai crude exceeds $80 per barrel to protect Filipinos from a potential price surge.

Economic managers are seeking authority to allow President Ferdinand R. Marcos Jr. to lower excise taxes on petroleum products if oil prices surge to around $80 per barrel or beyond, Manila Bulletin has learned from a top Cabinet official.

Executive Secretary Ralph G. Recto told Manila Bulletin on Tuesday, March 3, that the economic team has proposed to “[authorize] the President in an emergency situation to reduce excise taxes when petroleum prices reach a certain level.”

Suspending excise taxes entirely may still be off the table, as these levies remain a vital revenue stream for the government.

This proposal, now being finalized, comes amid growing pressure on Philippine oil imports from escalating missile attacks in the Middle East, pitting United States (US)-backed Israel against Russia-backed Iran.

Iran has officially blocked the Strait of Hormuz, a key channel that handles a fifth of the world’s crude oil supply. The constriction of global oil flows could drive prices even higher. Dutch financial giant ING wrote in a commentary published on Monday, March 2, that the Philippines sources nearly 90 percent of its oil imports from the Middle East.

With the Strait of Hormuz blocked, the Philippines could face both an oil supply shortage and faster inflation.

Recto, a former secretary of the Department of Finance (DOF), said the economic team is considering $80 per barrel as the threshold at which Marcos could exercise emergency powers to reduce excise taxes on petroleum products.

“Previously, under the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the threshold was $80 per barrel for at least a month. We’re considering that as an option,” Recto explained to Manila Bulletin.

According to the Cabinet official, granting this authority to the President could become part of the country’s “tool kit” for managing economic risks during heightened geopolitical tensions.

“There are many others,” Recto added, without disclosing the other proposed measures under consideration.

For his part, Finance Secretary Frederick D. Go confirmed in a March 3 statement that the economic team will indeed work with Congress “to secure authority for the President to temporarily reduce excise taxes on fuel should the price of Dubai crude oil exceed $80 per barrel.”

However, Go clarified that this emergency authority will not be automatically exercised. “It is a precautionary measure — a ready policy tool that the President may use, if necessary, to act swiftly in protecting Filipino consumers and safeguarding the broader economy,” he said.

Three days into the wave of aggression in the Middle East, the chief economic manager said the Philippine government is closely monitoring developments arising from the escalating tensions, particularly their impact on pump prices and the overall economy.

Go assured that the country still has an ample oil buffer equivalent to up to two months of domestic demand. This offers a cushion against temporary price swings. “Oil supply is also secure, given the country’s flexibility to source from multiple oil-producing states,” he said.

He further said the government is keeping a close eye on global oil prices and on how long the conflict lasts, as these will shape its next steps.

Currently, the Department of Energy (DOE) is actively coordinating with oil companies to phase in changes to pump prices.

Go said the government remains alert amid the ongoing conflict, adding that the DOF will continue working hand-in-hand with relevant agencies to ensure a measured and timely response to external pressures.

Economists say the government has already made some preparations. China Banking Corp. (Chinabank) chief economist Domini Velasquez and Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort noted that the 2026 national budget of ₱6.793 trillion includes provisions for fuel subsidies.

Velasquez said this assistance could be deployed if oil prices average $80 per barrel for at least a month, aligning with the economic team’s proposed threshold. “A complete and timely rollout would help shield the most vulnerable sectors,” she said.

Velasquez also cautioned against blanket tax suspensions, noting that such measures mainly benefit high-income households that consume more fuel while reducing government revenue.

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