Palace Clarifies VAT Suspension on Fuel Requires Congressional Approval
Malacañang has officially stated that suspending the value-added tax (VAT) on petroleum products is beyond the authority of President Ferdinand Marcos Jr. and necessitates an act of Congress. This clarification came on Monday, April 13, 2026, in response to appeals from business groups, including the Philippine Chamber of Commerce and Industry, to eliminate the VAT on fuel as global oil prices surge.
Palace Press Officer Claire Castro emphasized that no current law grants the President emergency powers to suspend VAT on fuel products. "At present, there is no law granting the President emergency powers to suspend VAT on fuel products. This rests with Congress," Castro explained in Filipino. Under the Tax Reform for Acceleration and Inclusion (Train) Law, petroleum products are subject to a 12-percent VAT, in addition to excise taxes, which significantly contribute to pump prices.
Castro highlighted the administration's balancing act between providing relief to consumers and maintaining essential government revenues. "The President is balancing everything... taxes are needed to fund government priorities," she noted. These revenues support critical programs such as infrastructure development, social services, and targeted subsidies designed to protect vulnerable sectors from escalating costs.
Administration Implements Measures to Mitigate Fuel Price Impact
In lieu of VAT suspension, the administration has rolled out various initiatives to alleviate the burden of high fuel prices. These include fuel subsidies for public utility vehicle drivers and service contracting programs aimed at stabilizing transport costs. The National Government continues to explore additional strategies to cushion consumers and businesses from the effects of rising oil prices.
While the VAT remains unchanged, President Marcos has taken action under Republic Act (RA) 12316, which he recently signed into law. This legislation empowers the executive branch to suspend or reduce excise taxes on petroleum products in response to surging global oil prices, particularly those driven by conflicts in the Middle East.
RA 12316 allows the President to intervene once the average price of Dubai crude oil reaches or exceeds $80 per barrel for one continuous month. The law, effective until December 31, 2028, includes specific provisions: any suspension or reduction is limited to a maximum of three months at a time, with a total cap of one year. Taxes revert to their original rates one week after the average monthly price falls below the $80 threshold or after the three-month period ends, with the Department of Energy certifying such price drops.
Marcos Orders Excise Tax Removal on LPG and Kerosene
Exercising this authority, President Marcos has ordered the removal of excise taxes on liquefied petroleum gas (LPG) and kerosene to mitigate the impact of an impending energy crisis. During a press conference, Marcos detailed the benefits, stating that this move translates to a reduction of P3.36 per kilo of LPG, or nearly P37 per tank, and P5.60 per liter of kerosene. "This means lower costs for cooking and for the daily needs of the family," he affirmed.
Additionally, Marcos signed Executive Order 110, declaring a state of national energy emergency and establishing the Unified Package for Livelihoods, Industry, Food, and Transport (Uplift) Committee. This committee, set to meet on Tuesday, April 14, 2026, will strategize on lowering prices and normalizing supplies of oil and food.
Marcos also assured the public of sufficient supplies and stable prices for basic food commodities, including rice, corn, vegetables, sugar, fish, poultry products, and eggs, until the end of April. He has instructed the Department of Agriculture and the Tariff Commission to lower tariffs on imported food to help reduce consumer prices, while ensuring protections for local production. "The directive is clear—this cannot be done haphazardly. Every step includes clear protections for our local production; we will protect consumers, farmers, and industry. That is the balance we are looking for," Marcos concluded.
