Marcos suspends excise taxes on LPG, kerosene anew

A worker unloads tanks of liquefied petroleum gas (LPG) at a store in Paco, Manila, on January 30, 2023.

Rappler

The tax relief does not extend to gasoline and diesel, as Finance Secretary Frederick Go says this would 'not be progressive' because higher-income consumers who use more of the two fuels would capture more of the benefit

AT A GLANCE

• President Ferdinand Marcos Jr. has suspended excise taxes on liquid petroleum gas (LPG) and kerosene due to high global oil prices, effective immediately upon publication.
• The suspension lasts a maximum of three months and does not apply to gasoline or diesel, which have seen significant price increases.
• The measure will be reviewed monthly by the Development Budget Coordination Committee and the Department of Energy to determine its continuation or modification.

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MANILA, Philippines – President Ferdinand Marcos Jr. has ordered the full suspension of excise taxes on liquid petroleum gas (LPG) and kerosene as high global oil prices continue to hit the wallets of Filipino consumers; the relief, however, does not extend to gasoline or diesel.

Marcos issued Executive Order No. 125 on Friday, September 25, following a recommendation from the Development Budget Coordination Committee (DBCC). The order will take effect immediately upon publication in the Official Gazette or a newspaper of general circulation.

The suspension covers LPG, except when used as a raw material for petrochemical production or for motive power, and kerosene, except when used as aviation fuel. Gasoline and diesel, which have seen successive sharp price increases in recent weeks, were not included in the tax break.

The relief can last a maximum of three months, but may end earlier if the one-month average price of Dubai crude falls below the $80-per-barrel level.

The move came after the Department of Energy (DOE) certified that one-month average Dubai crude price had reached $99.41 per barrel, well above the $80-per-barrel threshold required for the government to suspend fuel excise taxes. The DBCC subsequently recommended full suspension.

The DBCC and DOE are also required to review the measure every month and may recommend whether the suspension should continue, be modified, or ended.

Finance Secretary Frederick Go earlier told senators that suspending excise taxes on gasoline and diesel would “not be progressive,” given that wealthier consumers use more of the two fuels and would capture a larger share of the benefit. The government could also lose about P12 billion in tax revenues each month if the break was extended to gasoline and diesel.

The government previously suspended excise taxes on LPG and kerosene for three months beginning in April after Dubai crude similarly breached the trigger threshold. Gasoline and diesel were also excluded from that earlier round.

The Department of Finance previously estimated that suspending excise taxes for LPG and kerosene for the maximum three-month period would cost the government around P4.1 billion in foregone revenues. – Rappler.com