The fuel tax reduction bill Philippines proposed by Senators Alan Peter Cayetano and Pia Cayetano seeks to allow the suspension or reduction of fuel excise taxes during spikes in global oil prices.

Senate Minority Leader Alan Peter and Senator Pia Cayetano on Wednesday filed a bill seeking to allow the automatic suspension or reduction of excise taxes on fuel amid spikes in global oil prices triggered by escalating tensions in the Middle East.

Proposed Senate Bill No. 1927 amends Section 148 of the National Internal Revenue Code of 1997, as amended by Republic Act No. 10963 or the TRAIN Law, to grant the President the authority to suspend or reduce fuel excise taxes once global oil prices hit a specified threshold.

Under the bill, the President, upon recommendation of the Development Budget Coordination Committee, may suspend or reduce excise taxes on fuel through an executive order if the average Dubai crude oil price based on the Mean of Platts Singapore for one month reaches or exceeds US$80 per barrel.

The suspension or reduction will be automatically lifted when the said condition is no longer present.

In their explanatory note, the two senators cited growing instability in major oil-producing countries in the Middle East, including Saudi Arabia, Iran, Iraq, Kuwait, Qatar, and the United Arab Emirates, warning that escalating strikes and retaliatory attacks threaten the stability of “one of the world’s most critical energy supply hubs.”

Stressing that the Philippines remains highly vulnerable to global supply shocks, the lawmakers pointed out that the impact of recent global developments was immediate.

Given the escalating tension in the Middle East, international gasoline prices jumped from US$79.63 to US$90.32 per barrel in just a few days. This immediately pushed local fuel retailers to raise pump prices by about P1.90 per liter for gasoline, P1.20 for diesel, and P1.50 for kerosene.

“These developments demonstrate the need for a responsive mechanism that authorizes the suspension of excise taxes on fuel whenever extraordinary events or external shocks significantly disrupt global oil prices,” the Cayetanos said in the bill’s explanatory note.

They added that establishing such a safeguard would allow the government to act swiftly to mitigate inflation and shield consumers from added economic burden without waiting for new legislation.

The bill also clarifies that while the TRAIN Law previously gave the President limited authority to suspend scheduled fuel excise tax increases from 2018 to 2020, there is currently no standing law that expressly grants continuing powers to the President to suspend the imposition of excise taxes.

By institutionalizing the authority granted to the President to address emergency conditions, the lawmakers aim to ensure timely relief for consumers and greater stability in the domestic fuel market.