Renewed Middle East conflict revives fuel excise tax suspension debate
Rising global oil prices have sparked a debate in the Philippines over whether the government should suspend excise taxes on petroleum products. Experts suggest that targeted subsidies and energy conservation are more effective solutions than tax cuts to manage the economic impact of the Middle East crisis.
Why it matters
The decision impacts national inflation, government revenue, and the cost of living for vulnerable sectors in the Philippines during a period of energy instability.
Renewed upward pressure on global oil prices has revived calls for the Philippine government to suspend excise taxes on petroleum products, although experts remain divided on whether such a move would be effective.
This comes as fuel retailers are expected to hike diesel prices by as much as PHP 10.50 per liter and gasoline prices by as much as PHP 4 per liter this week.
“At this point, I would not immediately recommend suspending the fuel excise tax,” Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., told BusinessWorld.
“A better approach is to focus on targeted interventions that ease the burden on vulnerable sectors while preserving much needed government revenues,” he added.
Mr. Ravelas said the government should instead expand fuel subsidies for public transport, farmers, and fisherfolk; provide targeted cash assistance to low-income households; and accelerate energy conservation measures.
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