Legarda pushes bill to cut excise and VAT on petrol products amid oil price crisis

Filipinos are being hit by relentless increases in petroleum prices that are driving up daily fares and household costs nationwide, with diesel prices increasing by as much as 24 pesos per liter , kerosene by 32 to 38.50 pesos per liter, and gasoline by 7 to 13 pesos per liter in a single week, as oil firms implement staggered “big-time” hikes. At current pump prices of around 70 pesos per liter for diesel, an increase of about 24 pesos represents a jump of more than 50 percent in just a matter of days , underscoring how sharply global oil shocks can hit Filipino consumers. Transport groups are already warning of possible fare hikes, while families brace for higher LPG prices that make even basic cooking more expensive, putting added pressure on workers, drivers, and commuters who rely on affordable fuel just to get through the day.

At current pump prices of around 70 pesos per liter for diesel, an increase of about 24 pesos represents a jump of more than 50 percent in just a matter of days, underscoring how sharply global oil shocks can hit Filipino consumers. Transport groups are already warning of possible fare hikes, while families brace for higher LPG prices that make even basic cooking more expensive, putting added pressure on workers, drivers, and commuters who rely on affordable fuel just to get through the day.

In response, Senator Loren Legarda has filed Senate Bill No. 1942, or the proposed “Fuel Price Relief Act,” which creates a clear, rules-based way to temporarily roll back fuel taxes when global oil prices reach crisis levels. By allowing excise tax and VAT on gasoline, diesel, kerosene, and LPG to be reduced or suspended, the measure aims to soften pump prices before the full impact of external shocks is passed on to commuters, households, and small businesses

For a jeepney driver, this kind of mechanism can mean that when diesel surges by 20 pesos or more per liter because of a war thousands of kilometers away, the tax component of every liter can be adjusted to prevent the fare from having to jump as sharply just to keep the route viable. For a household using LPG, tax relief can help temper the next price increase so that basic cooking remains affordable despite turmoil in the Strait of Hormuz.

Legarda’s proposal directly targets the “tax on tax” effect created by the combination of excise tax and the 12 percent VAT on fuel, which magnifies pump prices whenever global oil surges.

“Kapag tumataas ang presyo ng krudo, hindi lang ito isyu ng mga may sasakyan, ito ay isyu ng pamasahe, presyo ng gulay at isda, at araw-araw na gastos ng bawat pamilyang Pilipino,” Legarda stressed.

SBN 1942 sets clear, measurable conditions under which fuel taxes may be dialed down for a limited period, to cushion the impact of global oil spikes on domestic pump prices. Tax relief can initially last up to 90 days and be extended for another 90 days if the fuel crisis continues and will automatically be lifted once Dubai crude falls below the trigger level for 30 consecutive days, ensuring that relief is targeted during crises and withdrawn when conditions normalize.

“Ibig sabihin, kapag umakyat nang sobra ang presyo ng langis sa pandaigdigang merkado, hindi buwis mismo ang lalong magpapabigat sa presyo sa gasolinahan,” Legarda explained. “May malinaw at nakatakdang mekanismo na kikilos para magbigay-ginhawa sa mga konsumer.”

SBN 1942 further prohibits hoarding, profiteering, cartelization, and other forms of market manipulation in the fuel sector, and directs the energy, trade, customs, and competition authorities to strengthen monitoring and enforcement.

“Kung magbibigay tayo ng tax relief sa mamamayan, dapat siguraduhin din nating hindi ito kakainin ng abusadong pricing o kartel sa langis,” Legarda noted.

Legarda framed fuel tax relief during extraordinary oil shocks as a practical tool to shield vulnerable sectors from sudden external crises, while still maintaining a progressive and equitable tax system.

“Hindi natin kontrolado ang giyera sa ibang bansa o galaw ng merkado sa labas,” she said. “Pero kontrolado natin kung gaano kabigat ang buwis na ipinapasa sa mamamayan kapag may matinding krisis sa presyo ng langis.”

“Sa panahong bawat litro sa gasolinahan ay pinag-iipunan, tungkulin ng Estado na may konkretong paraan para maibsan ang bigat na ito,” Legarda added. “Ito ang layon ng panukalang batas na ito, praktikal, targetted, at agarang tulong, lalo na sa pinakamahirap.”(30)