Possible Fuel Tax Suspension Looms as Oil Prices Surge

President Ferdinand R. Marcos Jr. has signed into law Republic Act No. 12316, a measure that authorizes the temporary suspension or reduction of excise taxes on petroleum products once global oil prices reach a defined threshold, giving the government a mechanism to soften the impact of rising fuel costs on the economy. The law was signed on March 25, 2026.

Under RA 12316, the President may suspend or reduce fuel excise taxes upon the recommendation of the Development Budget Coordination Committee (DBCC) and in coordination with the Secretary of Energy, when the average Dubai crude oil price based on Mean of Platts Singapore (MOPS) reaches or exceeds US$80 per barrel for one month. The measure also allows the suspension or reduction to apply to specific petroleum products, whether as a full suspension or a partial reduction of the applicable rates.

The law provides that any suspension or reduction may last for up to three months at a time, but for not more than one year in total. Excise tax rates automatically revert to their original levels either one week after the one-month average Dubai crude price falls below US$80 per barrel, as certified by the Department of Energy, or after three months of implementation, whichever comes first. The authority granted to the President under the law may be exercised only until December 31, 2028.

RA 12316 also requires the executive branch to report to Congress on the factual and policy basis for any suspension or reduction, including projected revenue losses, likely effects on households, inflation and fuel prices, cost-benefit analysis, and possible market distortions or unintended consequences. Oil companies are likewise required to submit monthly data to the Department of Energy on the cost components of petroleum products sold. The law takes effect 15 days after publication in the Official Gazette or in a newspaper of general circulation.

In a fresh development, the DBCC has already convened a special meeting to assess the effects of rising global oil prices and evaluate possible responses, including action on fuel excise taxes. According to DBM Undersecretary Goddes Hope Libiran, the committee has already formulated its recommendations and the DBCC principals are scheduled to meet with President Marcos early next week to present them for his consideration. These remarks were reported on April 1, 2026.

The timing is significant because, while the law has been signed, the President’s implementing order must still wait for the measure to take effect. Finance Undersecretary Karlo Fermin Adriano said President Marcos may issue an executive order on whether to suspend or reduce fuel excise taxes by April 12 or April 13, based on the law’s 15-day effectivity rule after publication.

Government officials have also outlined what a full suspension could mean at the pump. Reports said a total suspension of excise taxes would translate to reductions of P10.00 per liter for processed gas, P6.00 per liter for diesel fuel oil, P4.00 per liter for aviation turbojet fuel and aviation gas, and P3.00 per kilogram for LPG. At the same time, local fuel retailers implemented another round of price hikes this week, marking the 12th straight increase for gasoline and the 14th straight increase for diesel and kerosene.

The push for possible tax relief comes as oil prices remain elevated. GMA reported Brent crude hovering at about US$102 per barrel at the time of reporting, well above the law’s US$80 trigger benchmark. President Marcos has also earlier declared a state of national energy emergency and ordered the adoption of the Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT) to help secure energy supply stability and support transport, agriculture, and micro, small, and medium enterprises.

The DBCC, chaired by the Department of Budget and Management, includes the Department of Finance, the Department of Economy, Planning, and Development, and the Office of the President. Officials have said further updates will be provided once a final policy direction has been determined.