The US-Iran conflict has driven up oil prices in the Philippines, prompting calls to suspend excise taxes and regulate prices. Economists warn of drawbacks, including lost revenue and unequal benefits. Targeted aid for the vulnerable is seen as more effective.
Ongoing tensions in the Middle East, particularly the US-Iran conflict, have caused oil prices to rise, impacting transportation, food costs, and inflation in the Philippines. Government economists project inflation could reach as high as 7.5%. This has sparked proposals to suspend excise taxes on petroleum products and reinstate price regulations, presented as consumer protections.
In Congress, a bill is advancing that would empower President Ferdinand Marcos Jr. to suspend excise taxes during emergencies. It is sponsored by House Speaker Faustino “Bodjie” Dy and the president's son, Sandro Marcos. Additionally, there are calls to repeal the 1998 oil deregulation law, blamed for price volatility.
However, Dr. JC Punongbayan of the UP School of Economics argues that tax suspensions act as a blunt subsidy, benefiting middle-class and higher-income groups more, who use more fuel. Studies on the 2017 TRAIN Law show excise taxes are marginally progressive. Revenues could be lost between P136 billion and P300 billion, according to the Department of Finance and Bureau of Customs, funds that could support healthcare or education. Senator Sherwin Gatchalian has highlighted this 'trade-off'.
For more effective relief, targeted transfers are recommended, such as cash support for public utility vehicle drivers, farmers, and fisherfolk, who are most affected by oil shocks. Historically, the pre-deregulation Oil Price Stabilization Fund (OPSF) contributed P17.6 billion to the deficit from 1990 to 1997, per a report by Nimfa Mendoza.
Long-term, improvements in public transport and energy diversification are needed to reduce reliance on imported oil. While temporary measures may be justified by the conflict, they should not revive outdated, ineffective policies.
