“Binawasan natin ang buwis sa produktong pretrolyo na direktang ginagamit sa pang-araw-araw na buhay.”
That is what President Ferdinand Marcos, Jr. said during his speech in Malacañang on Monday (April 13), where he announced the removal of excise tax on liquefied petroleum gas (LPG) and kerosene.
“So, sa ilalim ng kapangyarihan na ibinigay sa atin ng batas, tinangggal ko na ang excise tax sa LPG at sa kerosene,” he said, adding that the removal of the levy is equivalent to PHP3.36 per kilo of LPG—almost a PHP37 reduction for every 11-kilogram tank—and PHP5.60 for every liter of kerosene.
However, despite removing the fuel excise tax on both products, the President clarified that the government will not remove the Value-Added Tax (VAT) on petroleum products, stressing that the tax’s revenues remain a key source of funding for broader social programs and public assistance.
Marcos said higher global oil prices have led to increased VAT collections, which the government uses to support sectors beyond transportation.
He noted that removing the tax would primarily benefit the petroleum market, while reducing funds for nationwide subsidies and cash aid.
“Here’s the thing with the VAT. Especially the VAT on oil, on petroleum products. The VAT on petroleum products, we are going to get a windfall profit from that because tumaas ‘yung presyo ng krudo,” said the President. “And because of that, all the importations will have, at the present VAT rate, we will get extra funds from that. If we take away the VAT on petroleum products, it will only help the petroleum market.”
The Chief Executive also noted that the government is currently providing assistance for the “entire society,” not only for those directly affected by rising petroleum prices.
“Hindi puwedeng titingnan lang natin is the petroleum, petroleum, petroleum. Kasi sinasabi ng mga tao, bakit puro transport workers lang ang tinutulungan niyo? Paano kami?…We also have to take care of the other sectors,” he said.
PBBM added that the additional funding the government will receive from VAT collections will be used to meet other necessities for the entire country and emphasized that those funds would not exist if the government removed the VAT on petroleum products alone, a reason why the government cannot do away with the tax.
However, the Chief Executive also said the government will still examine other options and should the time come to bring down VAT on any products, the President said the government will study it carefully.
“Right now, the balance, the cost-benefit analysis between the VAT collections and the benefit to people, to ordinary people, still favors that we collect VAT and we use the extra funds to provide the subsidies, to provide cash benefits, to provide all of those subsidies that we have been able now to provide, that we have to provide now to people to normalize people’s lives,” President Marcos said.
President Marcos signed R.A. 12316 last month, allowing him to temporarily suspend or reduce fuel excise taxes for up to 3 months per instance (maximum of 1 year) when Dubai crude oil prices exceed a certain per-barrel threshold.
The President also signed Executive Order No. 110 on March 24, declaring a state of national energy emergency in light of the ongoing conflict in the Middle East, which authorizes the chief executive to declare a critically low energy supply or imminent danger, and to implement the fuel and energy allocation plan and other energy conservation measures.
Moreover, the EO also adopted Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT) Committee as the government’s coordinated, whole-of-government response framework.
