MANILA — President Ferdinand R. Marcos Jr. signed Republic Act No. 12316 into law on March 25, 2026, granting the President the authority to temporarily suspend or reduce excise taxes on petroleum products when global oil prices reach critical levels. Officials say this measure is intended to protect consumers and stabilize the economy amidst continuing volatility in world energy markets.
The new law amends Section 148 of the National Internal Revenue Code of 1997 and allows the executive branch to intervene when crude oil prices surge, particularly during geopolitical tensions or supply disruptions that threaten to drive inflation higher.
Conditions for Suspending or Reducing Fuel Excise Taxes
Under Republic Act No. 12316, the President may suspend or reduce excise taxes on fuel upon recommendation of the Development Budget Coordination Committee (DBCC) and in coordination with the Department of Energy (DOE). This action can only be taken when the average price of Dubai crude oil, based on the Mean of Platts Singapore (MOPS), reaches or exceeds 80 U.S. dollars per barrel for one month prior to the issuance of the order.
Government officials stated that this threshold ensures the tax relief mechanism is used only during periods of significant market stress and not as a routine policy tool.
Government Aim to Buffer Rising Costs
“This law provides the government with flexibility to respond quickly to extraordinary increases in global oil prices without waiting for a lengthy legislative process,” a senior economic official said after the signing. “The goal is to cushion the impact on transportation, food prices, and basic commodities.”
Fuel excise taxes were increased under the Tax Reform for Acceleration and Inclusion (TRAIN) law in 2018. The TRAIN law helped fund infrastructure and social programs but drew criticism whenever oil prices climbed. Lawmakers supporting the new measure argued that the country needed a built-in safety mechanism to prevent sudden spikes in fuel costs from triggering broader inflation.
Scope and Duration of Tax Suspension
Republic Act No. 12316 allows the suspension or reduction of excise taxes to be applied either fully or partially, and only to specific petroleum products if necessary. The law also sets limits on how long the tax relief can remain in effect. Each suspension order may last for no more than three months, and the total period of suspension or reduction cannot exceed one year.
The law also mandates that the excise tax automatically return to its original rate if oil prices fall below the 80-dollar threshold or once the allowed period expires.
President’s Authority Valid Until 2028
The President’s authority to use the tax suspension power is temporary. The law states that the provision will only remain valid until December 31, 2028. After this date, Congress would need to pass a new measure to extend the authority.
Mandatory Reporting to Congress
To ensure oversight, lawmakers included strict reporting requirements in the statute. Within fifteen days after issuing an order to suspend or reduce excise taxes, and every month thereafter, the President must submit a report to both houses of Congress. The report should explain the factual basis for the decision, the expected loss in government revenue, and the anticipated impact on inflation, fuel prices, and economic activity.
The report must also include a cost-benefit analysis and an assessment of possible market distortions or unintended consequences that may result from lowering fuel taxes.
Oil Companies Required to Submit Cost Data
Oil companies will also be required to provide monthly reports to the Department of Energy detailing the cost components of petroleum products sold in the market. The Department of Energy must forward the information to the DBCC and Congress, while the Bureau of Internal Revenue and the Bureau of Customs are required to submit data on the volume and declared value of petroleum products affected by the tax suspension.
Supporters of the measure say the monitoring provisions are necessary to ensure any tax relief granted by the government actually benefits consumers and does not simply increase the profits of oil companies.
Philippines Vulnerable to Global Price Shocks
Economic analysts note that the Philippines remains heavily dependent on imported fuel, making the country vulnerable to global price shocks caused by conflicts, supply disruptions, or production cuts by major oil-producing nations. In recent months, concerns about instability in the Middle East and tightening supply in global markets have renewed fears of another surge in oil prices similar to those seen in previous crises.
Transportation groups and consumer advocates have repeatedly called on the government to suspend fuel taxes during periods of high prices. They argue that rising diesel and gasoline costs quickly translate into higher fares, increased food prices, and higher electricity rates.
Concerns Over Government Revenue Reduction
Business groups, however, have warned that removing excise taxes could reduce government revenues needed to fund infrastructure, social services, and subsidies, making it important to limit the use of the authority to exceptional circumstances.
Law Takes Effect 15 Days After Publication
Republic Act No. 12316 will take effect fifteen days after publication in the Official Gazette or in a newspaper of general circulation.
Officials emphasized that the new law does not automatically reduce fuel prices but provides the government with a tool that can be used if global oil prices continue to rise sharply.
With the measure now in place, the administration will be able to act more quickly should another energy crisis threaten to push inflation higher and place additional pressure on Filipino households.
Photo credit: Malacañang Records Office