It is one of the measures of the government that looks to cushion the public from the impact of rising fuel costs on the economy.
On Wednesday, March 25, President Ferdinand Marcos Jr. into law the Republic Act 12316, which is a measure authorizing the suspension or reduction of excise taxes on petroleum products once global oil prices reach a set threshold.
Through the piece of legislation, the President, upon recommendation of the Development Budget Coordination Committee (DBCC) and in coordination with the Energy Secretary, is allowed to suspend or reduce fuel excise taxes if Dubai crude oil price reaches or exceeds USD80 per barrel for one month.
In this law, it is stated that any suspension or reduction of fuel excise taxes can only last up to three months, but not more than one year in total, and taxes will automatically return to their original rates either one week after the one-month average Dubai crude oil price drops below USD80 per barrel, as certified by the Department of Energy, or after three months—whichever comes first.
Furthermore, it was also explicitly stated that the emergency power of the President will be exercised only until December 31, 2028.
The executive branch is also required to report to Congress the basis and goals for reducing or suspending excise taxes.
It must include expected revenue losses, effects on households, impact on inflation and fuel prices, cost-benefit analysis, and any possible market distortions or unintended consequences.
“The report shall include a recommendation on whether the suspension or reduction of excise taxes should be maintained, modified, or lifted, and shall form part of the basis for any continued suspension or reduction,” it also stated.
Meanwhile, oil companies will also be required to submit to the Department of Energy (DOE) the monthly data on the cost components of the price of petroleum products sold.
Lastly, the law shall take effect 15 days after publication in the Official Gazette or a newspaper of general circulation.