In a bid to protect consumers, Sen. Francis “Chiz” Escudero has filed a bill that would urgently authorize the President to suspend or reduce taxes on petroleum products during times of global oil supply disruptions due to external shocks.
Senate Bill No. 1938, filed on Monday, March 9, empowers a sitting president to reduce excise and value-added taxes on petroleum products when global oil prices breach specific thresholds due to various factors. The measure is meant to cushion the economic impact of a global oil price surge and protect consumers from price shocks.
Such powers shall take effect once the average Dubai crude oil price exceeds $80 per barrel for a month—the benchmark observed in the Philippine market. Under Escudero’s bill, the president may cut taxes on oil by up to 50 percent once this threshold is reached.
Escudero filed the bill amid the anticipated surge in oil prices due to the ongoing conflict in the Middle East. Global crude oil prices have been rising sharply due to the US-Israel war on Iran, which has affected the oil-producing region. Brent and West Texas Intermediate (WTI) crude are above $90 per barrel, while Dubai crude is already nearing $80.
“These developments have driven home a hard truth: as a net importer of crude oil, the Philippines remains highly vulnerable to external oil shocks and the inflationary pressures they trigger on transportation costs, electricity rates, and the prices of basic goods,” the lawmaker said.
The bill provides for an innovative “flexibility clause,” which allows the President to implement oil tax cuts even before the barrel price threshold is breached. This shall take effect during times of extraordinary supply disruptions, geopolitical crises, or force majeure events, once certified by the Energy Secretary.
Oil tax rates shall automatically revert to normal levels when global oil supply disruptions and price surges have eased.
Escudero asked Congress to immediately act on the bill, citing the urgency of the situation.
“Considering the urgent need to protect the Filipino people from sudden oil price shocks and their inflationary effects, the immediate approval of this measure is earnestly sought,” Escudero said.
The government has taken steps to manage the expected impact of the Mideast conflict, enforcing measures to save on oil and energy consumption across the bureaucracy.
Earlier, Escudero encouraged the private sector, families and individuals to support government measures by reducing their fuel and electricity use through adopting more sustainable practices.