THE Financial Executives Institute of the Philippines (Finex) on Friday backed the proposed temporary suspension of fuel excise taxes and other fiscal measures, amid soaring oil prices caused by the war in Iran which has spilled over to the Middle East.
Approximately 98 percent of the Philippines’ crude oil imports come from the Middle East.
On March 10, the House Committee on Ways and Means approved a measure authorizing President Ferdinand Marcos Jr. to suspend or reduce excise taxes on petroleum products during national or global economic emergencies.
Fuel excise taxes under Republic Act 10963, or the Train Law, consist of P10 per liter of gasoline, P6 per liter of diesel and P3 per kilogram for liquefied petroleum gas, plus 12-percent value-added tax.
House lawmakers are expected to pass the bill on Monday.
“As international fuel prices continue to rise sharply, the impacts reverberate across the Philippine economy — raising transport and logistics costs, increasing the cost of moving agricultural products and straining business operations across multiple sectors,” Finex said in a statement.
“These costs [are] ultimately passed to consumers through higher prices of essential goods and services. In moments of heightened global instability, economic policy must focus on stability and controlling inflation,” the business group noted, adding that sudden spikes in fuel costs weaken consumers’ purchasing power and raise the overall cost of living.
Suspending or reducing the fuel excise tax can ease inflationary pressures on food prices, logistics costs and household expenses, Finex pointed out.
The group — whose members are CEOs and CFOs of top corporations, as well as entrepreneurs, lawyers, CPAs and academicians — also proposed a long-term framework for suspending or reducing fuel excise taxes in times of crises to ensure predictability, readiness and disciplined economic management.
The framework consists of the following:
– Quick activation based on predetermined thresholds in global crude prices, as well as geopolitical disruptions, and use of widely recognized benchmarks to ensure transparency.
– Preset maximum suspension periods to reinforce fiscal discipline and mechanisms to prevent indefinite extensions without economic justification.
– Periodic publication of fiscal implications to maintain clarity on government financing conditions.
– Ensure that normal taxation resumes once market conditions stabilize and allows predictability for businesses, investors and consumers.
“The government must act swiftly should global conditions worsen and inflationary pressures intensify by implementing a rules-based, time-bound suspension of fuel excise taxes and other fiscal measures to stabilize fuel prices,” Finex said.
