Metro Manila, Philippines – The Department of Finance said additional value-added tax (VAT) collections from higher fuel prices will not be enough to offset potential revenue losses from suspended excise taxes on diesel and gasoline.
Speaking at a Palace briefing on Tuesday, April 14, Finance Undersecretary Karlo Adriano said the government expects about ₱13 billion in additional VAT collections over three months if global oil prices average $100 per barrel.
But this would fall short of the estimated ₱43.6 billion in losses if excise taxes on diesel and gasoline are also suspended, on top of the already approved tax cuts on liquefied petroleum gas (LPG) and kerosene.
“Your additional VAT collection will be around 13 to 14 billion and then there’s a negative revenue loss of around 30 billion,” Adriano said.
He said the gap underscores the fiscal risks of broader fuel tax cuts, prompting the government to prioritize targeted relief measures.
The DOF reiterated that removing excise taxes on diesel and gasoline would not significantly lower pump prices.
“For diesel, it’s only six pesos per liter. Given the price increase, the six pesos decrease is relatively small,” Adriano said.
[Translation: The ₱6 per liter reduction is relatively small compared to current prices.]
Officials from higher-income groups mostly consume diesel, raising concerns over who would benefit from across-the-board tax cuts.
Energy Secretary Sharon Garin said the government opted for a higher, targeted subsidy for transport workers, including a ₱10 per liter fuel discount.
“Ang 10 pesos, this is even more than what an excise tax exemption can offer, compared to six,” she said.
[Translation: The ₱10 discount is even higher than what an excise tax exemption can offer.]
Garin said the subsidy benefits the transport sector, which accounts for about 65 percent of diesel consumption and faces regulated fares despite rising fuel costs.
She noted the need to shield low-income households from the economic crisis.
The government earlier rejected proposals to suspend excise taxes on diesel and gasoline, opting instead for targeted relief measures, including the full suspension of taxes on LPG and kerosene.
Finance Secretary Frederick Go said the decision followed a review by the Cabinet-level Development Budget Coordination Committee as global oil prices took a beating from the Middle East conflict.
The move is expected to result in savings of about ₱36.96 per 11-kilogram LPG cylinder and ₱5.56 per liter of kerosene, aimed at easing the cost of cooking fuel and basic energy needs.
The DBCC said suspending excise taxes on diesel and gasoline would have minimal impact on pump prices, while significantly reducing government revenues needed for public services.
Instead, the government is rolling out targeted subsidies for transport workers, commuters, farmers and fisherfolk under Republic Act 12316, which allows President Ferdinand Marcos Jr. to adjust fuel taxes during periods of high global oil prices.
