Metro Manila, Philippines – The government warned that suspending the value-added tax (VAT) on fuel could result in major revenue losses as economic managers continue to weigh options to cushion the impact of rising oil prices.
At a Palace briefing on Tuesday, April 14,, Finance officials said proposals to suspend VAT on fuel are under review, but flagged the fiscal risks.
Finance Undersecretary Karlo Adriano said the government is already facing potential losses from earlier tax adjustments, and broader measures like VAT suspension would further strain public finance.
He explained that even with higher fuel prices generating more VAT collections, these gains are limited.
“Additional VAT collection will be around ₱13 to ₱14 billion,” Adriano said, referring to projected collections over three months.
He said removing VAT altogether would have a far bigger impact, with estimates from economic managers placing potential revenue losses at around ₱120 billion in several months.
Despite calls from some sector and lawmakers, the government said VAT suspension is not within the special powers granted to the president.
Under Republic Act 12316, the president is authorized to temporarily suspend or reduce excise taxes on petroleum products when global oil prices exceed a set threshold, but the law does not cover VAT.
This means any move to suspend VAT would require separate legislation.
Energy Secretary Sharon Garin said the priority is to assist sectors most affected by rising fuel costs, particularly transport workers and low-income households.
Officials added that policies are subject to regular monthly review, with the Cabinet-level Development Budget Coordination Committee assessing whether further interventions are needed as the Middle East crisis continues to affect global oil markets.
