Senator Legarda files bill to roll back fuel taxes during oil price spikes

Senator Loren Legarda has filed a bill seeking temporary fuel tax relief as Filipino consumers grapple with sharp increases in petroleum prices that are pushing up transportation fares and household expenses nationwide.

Recent staggered “big-time” fuel price hikes saw diesel increase by as much as 24 pesos per liter, kerosene by 32 to 38.50 pesos per liter, and gasoline by 7 to 13 pesos per liter within a week.

At current pump prices of around 70 pesos per liter for diesel, an increase of about 24 pesos represents a jump of more than 50 percent in just a matter of days, highlighting how global oil shocks can quickly hit Filipino consumers.

Transport groups have already warned of possible fare hikes, while households are bracing for higher liquefied petroleum gas (LPG) prices that could make basic cooking more expensive. The rising costs are expected to further strain workers, drivers, and commuters who rely on affordable fuel for daily mobility and livelihood.

In response, Legarda filed Senate Bill No. 1942, or the proposed “Fuel Price Relief Act,” which seeks to establish a rules-based mechanism allowing the temporary reduction or suspension of excise tax and value-added tax (VAT) on gasoline, diesel, kerosene, and LPG when global oil prices reach crisis levels.

The measure aims to cushion domestic pump prices before the full impact of international oil shocks is passed on to commuters, households, and small businesses.

Under the proposal, fuel taxes could be adjusted to help temper sudden price spikes. For instance, if diesel surges by 20 pesos or more per liter due to global disruptions such as conflicts affecting key oil routes like the Strait of Hormuz, the tax component of fuel prices could be temporarily reduced to ease pressure on public transport fares and operating costs.

Similarly, tax relief for LPG could help moderate price increases for households that rely on it for daily cooking.

Legarda said the proposal also seeks to address the “tax on tax” effect created by the combination of excise tax and the 12 percent VAT imposed on fuel products, which further drives up pump prices whenever global oil costs surge.

“Kapag tumataas ang presyo ng krudo, hindi lang ito isyu ng mga may sasakyan, ito ay isyu ng pamasahe, presyo ng gulay at isda, at araw-araw na gastos ng bawat pamilyang Pilipino,” Legarda stressed.

The bill sets clear conditions when fuel taxes may be temporarily reduced. Tax relief may initially last up to 90 days and can be extended for another 90 days if the fuel crisis persists.

The relief will automatically be lifted once Dubai crude prices fall below the trigger level for 30 consecutive days, ensuring the measure remains targeted during periods of crisis and is withdrawn once market conditions stabilize.

“Ibig sabihin, kapag umakyat nang sobra ang presyo ng langis sa pandaigdigang merkado, hindi buwis mismo ang lalong magpapabigat sa presyo sa gasolinahan,” Legarda explained. “May malinaw at nakatakdang mekanismo na kikilos para magbigay-ginhawa sa mga konsumer.”

Aside from tax relief, the proposed measure also seeks to strengthen oversight in the fuel sector by prohibiting hoarding, profiteering, cartelization, and other forms of market manipulation.

It also directs energy, trade, customs, and competition authorities to intensify monitoring and enforcement.

“Kung magbibigay tayo ng tax relief sa mamamayan, dapat siguraduhin din nating hindi ito kakainin ng abusadong pricing o kartel sa langis,” Legarda noted.

Legarda said the proposed measure is intended to shield vulnerable sectors from sudden external oil shocks while maintaining a progressive and equitable tax system.

“Hindi natin kontrolado ang giyera sa ibang bansa o galaw ng merkado sa labas,” she said. “Pero kontrolado natin kung gaano kabigat ang buwis na ipinapasa sa mamamayan kapag may matinding krisis sa presyo ng langis.”

“Sa panahong bawat litro sa gasolinahan ay pinag-iipunan, tungkulin ng Estado na may konkretong paraan para maibsan ang bigat na ito,” Legarda added. “Ito ang layon ng panukalang batas na ito, praktikal, targetted, at agarang tulong, lalo na sa pinakamahirap.”