MARCOS GETS EMERGENCY POWERS TO CUT EXCISE TAX ON OIL PRODUCTS

PRESIDENT Ferdinand Marcos Jr. on Wednesday signed Republic Act No. 12316 into law, granting him the power to reduce or suspend the excise tax on petroleum products amid the increasing prices of oil in the world market due to the ongoing Middle East conflict.

- JOCELYN REYES

The President's emergency powers will last until December 31, 2028.

Under RA 12316, the President, upon the recommendation of the Development Budget Coordination Committee (DBCC), and in coordination with the secretary of the Department of Energy, may suspend the imposition of or reduce the excise taxes on fuel when the average Dubai crude oil price - based on Mean of Platts Singapore (MOPS) - reaches or exceeds US$ 80 per barrel for one month immediately preceding the issuance of the suspension or reduction order.

The suspension or reduction may be applied to specific petroleum products and implemented either as a full suspension or partial reduction of the applicable excise tax rates as may be warranted by prevailing conditions.

The suspension or reduction of the excise tax will be effective for three months.

During the period of suspension or reduction of excise tax, oil companies shall submit to the Department of Energy (DOE) monthly information on the cost components of the price of petroleum products sold, which the DOE shall then submit to the DBCC and Congress.

The Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) shall also submit to Congress a monthly report on the declared value and volume of petroleum products, the excise tax on which has been suspended or reduced.

After the three month-period, the President, through the DBCC and in coordination with the DOE, shall submit to the House of Representatives and the Senate a report on the factual basis and policy goals for the suspension or reduction of excise taxes; the estimated foregone revenues, including affected social benefits for different household deciles; the expected impact on inflation and fuel prices, a cost-benefit analysis, an assessment of possible market distortions, leakages, or unintended consequences arising from the suspension or reduction of excise taxes, and other economic activity.