Senate President Francis Escudero on Wednesday said he will refile a measure in the next Congress granting standby authority to the Department of Finance (DOF) or the president of the country to reduce Value Added Tax (VAT) and fix excise taxes on oil products during periods of extreme price volatility.
At a press conference, Escudero said the proposal is meant to cushion the public from price spikes driven by geopolitical disruptions — such as the recent Israel-Iran conflict — that send global crude prices surging beyond projected levels.
“Because of the ongoing conflict in the Middle East, one of the first bills we will file in the 20th Congress is a measure giving standby authority to lower VAT or fix excise taxes,” Escudero said. “What remains to be debated is the trigger: Will it be $80 per barrel, or some percentage margin above the projected range?”
Escudero said a similar authority was granted to the DOF several years ago but expired in 2020. He first proposed the idea during discussions on the Tax Reform for Acceleration and Inclusion (TRAIN) Law, which imposed higher excise taxes on petroleum products while retaining the 12 percent VAT.
Under the TRAIN Law, the excise on diesel is fixed, while VAT is calculated based on the selling price. Escudero argued this framework results in “windfall revenues” for the government during oil price surges — revenues that were not originally budgeted but come at the cost of higher consumer burdens.
“If oil prices jump from $40 to $100 per barrel, the government ends up collecting more even if it didn’t plan for that extra revenue. That’s not right,” Escudero said, adding that projected crude prices for 2025 hover between $40 and $60 per barrel.
He also stressed the importance of identifying an accurate benchmark for triggering the standby authority. “Will it be Dubai crude or Mean of Platts Singapore (MOPS)? For me, MOPS is more accurate,” he noted.
Escudero rejected renewed calls to scrap the Oil Deregulation Law, saying such reactions are often emotional and short-sighted.
“The abolition of oil deregulation is always a knee-jerk response when pump prices rise. But when prices fall — and they do — it’s conveniently forgotten,” he said. “What we need are built-in mechanisms like standby powers, so we can respond quickly when global prices shoot up.”
