House approves bill giving Marcos power to cut fuel excise tax

The House of Representatives on Monday approved a bill authorizing President Ferdinand Marcos Jr. to reduce or suspend excise taxes on fuel products amid rising oil prices driven by the United States and Israel’s war on Iran and continued tensions in the Middle East.

A total of 247 lawmakers voted in favor of the bill, while the three-member Makabayan bloc were the only ones who objected.

Iloilo City Lone District Representative Julienne “Jam” Baronda is among the co-authors of the measure, having earlier filed House Bill 8359, or the Emergency Petroleum Excise Tax Adjustment Act, seeking to grant Marcos limited authority to temporarily suspend or reduce excise taxes on petroleum products during national or global emergencies.

The approved measure, House Bill 8418, amends Section 148 of the National Internal Revenue Code to allow the President to suspend or reduce fuel excise taxes, subject to strict conditions and time limits, so relief can be activated without waiting months for a new law in the middle of a crisis.

House Majority Leader and Ilocos Norte Rep. Ferdinand Alexander “Sandro” Marcos, one of the authors of the measure along with Speaker Faustino “Bojie” Dy III, said the bill is designed for moments when global disruptions push fuel prices upward and Filipino families need a quick government response.

“This bill gives the President a measured tool to cushion that shock, with clear triggers, clear limits and clear reporting when the prices of fuel and basic commodities get too high. Proteksyon ito sa mga mamamayan sa biglaang pagsirit ng presyo ng mga pangunahing bilihin,” Marcos stressed.

Under the bill, the President may exercise the authority only upon recommendation of the Development Budget Coordination Committee and in coordination with the Secretary of Energy, and only if one of two conditions is present.

The first trigger is when the Dubai crude oil price, based on the Mean of Platts Singapore, reaches or exceeds USD 80 per barrel for one month immediately before the order to suspend or reduce is issued.

The second trigger is when there is a declared state of national emergency or calamity and it results in extraordinary increases in domestic pump prices, as certified by the Secretary of Energy.

During plenary deliberations, Marikina Rep. Miro Quimbo, chair of the House Committee on Ways and Means, defended the measure on the floor, stressing that the authority is not open-ended and is surrounded by safeguards meant to protect both consumers and fiscal stability.

To prevent abuse and to protect government revenues, the measure sets a firm duration limit of up to six months per suspension or reduction, unless Congress extends or terminates earlier through a joint resolution, and it caps the aggregate period at not more than one calendar year.

The bill also requires that the suspension or reduction be lifted once the extraordinary conditions no longer exist, and it provides for the automatic reinstatement of the excise tax rates after the period ends without need of further government action.

To ensure transparency, the bill requires the President, through the Secretary of Finance, to report to both chambers within 15 days from issuance of the order and every month thereafter, stating the factual basis for the action, the estimated foregone revenues, and the expected effects on inflation, fuel prices, and other economic activity.

The measure also mandates the issuance of implementing rules within 15 days from effectivity by the Department of Finance, the Department of Budget and Management, the Department of Economy, Planning, and Development, the Department of Energy, and the Bangko Sentral ng Pilipinas, in coordination with the Bureau of Internal Revenue and the Bureau of Customs.

If Marcos completely suspends the fixed excise taxes on petroleum products imposed under the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the price of kerosene will go down by PHP 5 per liter, diesel by PHP 6 per liter, and gasoline by PHP 10 per liter.

However, the government is estimated to lose PHP 136 billion in revenues from May to December if it takes the full suspension route, giving the President the option to just reduce the excise tax on fuel to cushion the impact of the oil price hike.

Oil prices in the Philippines saw a double-digit increase last week, which the Department of Energy said was the highest jump in history.

In the explanatory note of HB 8359, Baronda emphasized the vulnerability of the Philippines to global fuel price shocks.

“Recent escalation of armed conflict in the Middle East has created uncertainty in global energy markets and caused increases in international crude oil prices. As a country that relies heavily on imported petroleum, the Philippines is particularly vulnerable to these external shocks,” Baronda said.

“Rising fuel prices quickly translate into higher transportation costs, increased electricity generation expenses, and higher prices of basic goods, placing a significant burden on Filipino consumers and businesses,” she added.

Baronda said the measure includes safeguards to ensure fiscal responsibility.

“To ensure accountability and fiscal responsibility, the proposed measure includes safeguards such as prior certification from the Department of Finance, a strict six-month limit on the suspension or reduction, and mandatory reporting to Congress,” she said.

“By providing a flexible but carefully regulated policy tool, this measure aims to cushion Filipino consumers and the national economy from the immediate impact of sharp petroleum price increases during global crises,” Baronda said.

Marcos said the House moved the bill with urgency as part of the chamber’s push under Dy’s leadership.

“Under Speaker Dy, we are moving with discipline and urgency because the costs that hit families do not wait for politics. Ang trabaho natin is to keep options ready, act when the triggers are met and make sure relief reaches people without delay,” Marcos said.

The Makabayan bloc opposed the measure.

Gabriela Representative Sarah Elago of the Makabayan bloc previously said that a suspension of fuel excise tax would “fail to guarantee real relief from rising oil prices.”

“This is a short-term fix than simply removing the VAT and excise taxes through legislation,” Kabataan Representative Renee Co added on Monday.

If the Senate approves a similar bill, the measure will be sent to the desk of Marcos, who is expected to quickly sign it, since Malacañang already certified the measure as urgent.

Meanwhile, the Department of Social Welfare and Development has rolled out a cash aid program for public utility drivers affected by the oil price hike, starting with tricycle drivers in Metro Manila.

Co-authors of HB 8418 include Reps. Jefferson Khonghun, David “Jay-Jay” Suarez, Janette Garin, Kristine Singson-Meehan, Allan Ty, Claudine Diana Bautista-Lim, Salvador Pleyto, Jesus “Bong” Suntay, Ferdinand Martin G. Romualdez, Yedda Marie Romualdez, Andrew Julian Romualdez, Jude Acidre, Ryan Recto, Howard Guintu, Eduardo “Bro. Eddie” Villanueva, Lordan Suan, Adrian Salceda, Baronda, Tobias “Toby” Tiangco, Eric Go Yap, Rufus Rodriguez, Stephen James Tan, Gerardo “Gerryboy” Espina Jr., Zaldy Villa, Ernesto Dionisio Jr., Rolando Valeriano, Joel Chua, Maria Cristina Angeles, Ramon Rodrigo Gutierrez, James “Jojo” Ang Jr., and Sergio Dagooc.