AFTER making a great to-do about obtaining emergency powers to lower or suspend the excise tax on fuel to cushion the impact of rising oil prices, the government last week wimped out of a full-bore use of these powers.
On April 13, President Ferdinand Marcos Jr. declared that he would suspend excise taxes on liquefied petroleum gas (LPG) and kerosene, but Malacañang said the next day he would not be doing the same for diesel and gasoline. While the decision was disappointing, it was hardly surprising, given the mindset of the president’s economic advisers to maximize government revenues — or minimize revenue losses — to the disadvantage of the neglected middle class.
To date, the government’s response to rising oil prices has been targeted transport subsidies for public utility vehicle drivers aimed at keeping fares stable.
As of April 14, the Department of Budget and Management (DBM) has earmarked P238 billion for a comprehensive oil crisis response, including specific, transport-related cash subsidies for drivers that will cost P7.49 billion.
None of these measures, however, ease the burden on middle-class Filipinos, who make up about 40 percent of the population and who contribute between 60 percent and 70 percent of all individual income taxes collected, according to 2026 data from the Philippine Institute for Development Studies (PIDS).
Finance Secretary Frederick Go justified the Marcos administration’s decision not to provide tax relief on gasoline and diesel, calling it “balanced and fiscally responsible.”
Go said the Development Budget Coordination Committee (DBCC) recommended limiting the tax suspension to kerosene and LPG, citing their heavy use among low-income households, and concluded that suspending excise taxes on diesel and gasoline would have a limited impact on pump prices.
“[T]he DBCC has determined that suspending excise taxes on diesel and gasoline [is unlikely to] provide meaningful relief, as any reduction in retail pump prices would be marginal and largely offset by prevailing market dynamics,” Go said.
Couched in tone-deaf technocratic terms, this assessment ignores the real financial pain experienced by middle-income families that also suffer the effects of rapidly rising gas prices. A middle-income family that drives a sedan to work from Quezon City to Makati City and back would have to gas up four or five times a week, or make up to 20 visits to the pump in a month. A P10 reduction in the price of gasoline would mean savings of P2,000 a week or P8,000 a month — certainly a “meaningful” amount at a time that fuel prices have doubled.
For the middle class, a P10-per-liter reduction in gasoline would be a significant reprieve. By treating gas as a “luxury” consumption item, the government ignores that, for many middle-class workers, a car is a necessity for commuting due to the gaps in the mass transit system.
While recent efforts at “targeted relief” protect the most vulnerable, they often create a “squeezed middle” that shoulders the tax burden without receiving direct support.
Most middle-class individuals are private vehicle owners or commuters who use ride-sharing services. They do not qualify for these subsidies but face the same record-high pump prices.
The government’s primary justification for keeping fuel taxes is that the revenue (estimated at P136 billion in foregone revenue if suspended) is needed to fund social programs for the poor. But the middle class pays the bulk of the personal income and value-added taxes that fund these targeted subsidies.
Middle-income workers effectively pay twice: once through the taxes that fund subsidies for the poor, and again at the pump, where they receive no relief. This creates a cycle where the middle class subsidizes the survival of others while their own disposable income evaporates.
Even if a middle-class Filipino does not own a car, they are hit by the “second-round effects” of fuel prices that subsidies fail to stop, including higher logistics costs that drive the prices of food, other grocery items, and services.
PIDS notes that the lower-middle class (monthly income of P21,000 to P40,000) is the most precarious group. Because they earn just enough to be disqualified from government aid, a sustained period of high fuel prices can push these families into the “poor” category, adding to the ranks of the poor.
The government’s current strategy treats the middle class as a revenue source rather than a beneficiary. By focusing exclusively on “the poorest of the poor,” the policy fails to recognize that middle-class families are equally susceptible to the oil price shock and are being forced to forgo or give up some things — savings, education, or health care — to cover basic transport and energy costs.
Our policymakers need to be reminded that you cannot build up a nation by ignoring the needs of the middle class.
