Senator Imee Marcos Advocates for Temporary VAT Suspension on Fuel to Mitigate Rising Oil Prices
In a move to provide immediate relief to consumers and key economic sectors, Senator Imee Marcos has introduced legislation aimed at empowering President Ferdinand R. Marcos Jr. to temporarily suspend the value-added tax (VAT) on petroleum products. This initiative comes as a response to the escalating oil prices that have placed a significant financial strain on motorists and small-scale industries across the Philippines.
Legislative Action to Address Fuel Cost Crisis
On Thursday, March 12, 2026, Senator Marcos announced the filing of Senate Bill No. 120, a refiled version of her earlier proposal. The bill seeks to amend the National Internal Revenue Code, granting the President the authority to lower or suspend the 12 percent VAT on petroleum products for a period of up to one year during declared national emergencies or states of calamity. Marcos emphasized the foresight behind this measure, stating, "As early as 2022, we already saw and anticipated this crisis. That is why I filed SBN 187 to give the President the power to temporarily stop the imposition of VAT."
Under the proposed legislation, the President would be able to issue an executive order, following consultation with the Finance Secretary, to implement the VAT reduction or suspension on the sale and importation of petroleum products. This step is designed to alleviate the burden on consumers during periods of economic hardship, with Marcos highlighting that the tax is directly factored into pump prices, making its suspension an immediate benefit.
Potential Impact on Consumers and Targeted Sectors
Senator Marcos provided specific figures to illustrate the potential savings for consumers. She noted that diesel prices are expected to reach nearly P85 per liter this week, while gasoline may hit P74 per liter. If the VAT suspension is enacted, it could reduce costs by P8.43 per liter for diesel and P6.79 per liter for gasoline. This relief is intended to focus on sectors most vulnerable to fuel price increases, including drivers and operators, farmers, fisherfolk, and other small fuel consumers.
"We will focus only on small sectors most affected by rising oil prices – such as drivers and operators, farmers, fisherfolk, and other small fuel consumers," Marcos clarified. She also urged the Department of Finance to consider tailoring the VAT reduction to ensure that the benefits primarily aid these groups rather than large corporations, thereby maximizing the support for those in need.
Balancing Tax Relief with Government Revenue Concerns
Meanwhile, Senator Sherwin Gatchalian has raised concerns about the financial implications of such a tax suspension. He emphasized that any proposed suspension of excise taxes on petroleum products should not compromise government spending on essential programs, including social services, education, and health. "The reality is that there will be a tradeoff. But we should not sacrifice government support for social services, education, and health," Gatchalian stated in a separate statement.
Gatchalian pointed out that the Department of Finance estimates the proposed suspension could result in approximately P136 billion in foregone revenues if implemented from May to December this year. To address this potential shortfall, he called on the Department of Budget and Management to identify areas where government expenditures could be scaled back. Suggestions included reducing travel for government personnel and lowering fuel and electricity consumption, particularly as some agencies transition to a four-day work week.
This legislative effort underscores the ongoing debate between providing immediate economic relief and maintaining fiscal stability, as policymakers navigate the challenges posed by volatile oil markets and their impact on the Philippine economy.
