Earlier this week, President Ferdinand Marcos Jr. suspended excise taxes on liquefied petroleum gas (LPG) and kerosene. While this is expected to translate into savings for Filipino households and small businesses—around P37 per 11kg LPG cylinder and P5.60 per liter of kerosene—many were hoping for a blanket suspension that would have included gasoline and diesel.
Suspending excise tax on gasoline and diesel would drop fuel prices by P10/L and P6/L, respectively. However, Department of Finance Secretary Frederick Go describes these price changes as “marginal and largely offset by prevailing market dynamics.” DOF undersecretary Karlo Adriano also described possible price adjustments from excise tax suspension as “relatively small” relative to current fuel prices.
The DOF further argues that 85% of total diesel consumption in the Philippines comes from the top three income classes; a hypothetical excise-tax suspension on diesel would benefit the rich primarily. It is worth nothing, however, that diesel is used in several key industries in the country such as transport, logistics, and agriculture.
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Instead, the DOF is placing its focus on doling out targeted subsidies to sectors identified to be in most urgent need of aid. An example of this is the P10/L diesel discount for public utility vehicles.
Revenue loss is another concern the government has expressed with the suspension of excise taxes. According to Bureau of Customs commissioner Ariel Nepomuceno, they are already expecting a P520 million hit in revenue with the suspension of LPG and kerosene excise taxes.
Implementing a suspension on gasoline and diesel excise taxes would balloon potential revenue losses to P43.6 billion within three months, according to Adriano. These losses would outpace the increased value-added tax (VAT) collections brought about by increased fuel price in the same period, totalling around just P14 billion.
Since March 10, gasoline has climbed by more than P35/L. Diesel, on the other hand, has skyrocketed by P90/L. Kerosene similarly leaped by over P75/L.
