Fuel Price Relief Act

Senate Office of the Secetap TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES ) 26 MAR -9 P3:56 First Regular Session RECEIVED BY: SENATE S. No. 1942 Introduced by Senator Loren Legarda AN ACT ESTABLISHING A FUEL TAX STABILIZATION MECHANISM THROUGH THE TEMPORARY SUSPENSION OR REDUCTION OF EXCISE TAX AND VALUE-ADDED TAX ON PETROLEUM PRODUCTS DURING PERIODS OF EXTRAORDINARY GLOBAL OIL PRICE INCREASES EXPLANATORY NOTE The Philippines remains acutely vulnerable to the inherent volatility of the global energy market as a net importer of crude oil and petroleum products. Recent geopolitical tensions in West Asia and the Middle East have underscored the fragility of our domestic energy security given that a significant portion of global crude exports lies in this region. As international gasoline prices surge in response to these external shocks, the impact is felt almost immediately by Filipino consumers through the rapid adjustment of domestic fuel prices. Price spikes in petroleum products create a domino effect that increases the cost of transportation, logistics, and power generation. This inevitably leads to higher prices for basic goods and food, disproportionately burdening the most vulnerable sectors of our society, including public utility drivers, farmers, fisherfolk, and small-scale entrepreneurs. The combination of a fixed Excise Tax and a 12% Value-Added Tax (VAT) on fuel creates a compounding "tax on a tax" effect that drives up pump prices, especially as global Dubai crude oil currently hovers near the $80 per barrel threshold estimated by the Mean of Platts Singapore (MOPS). While the Tax Reform for Acceleration and Inclusion (TRAIN) Law (Republic Act

No. 10963) was designed to bolster fiscal sustainability, its rigid framework lacks a continuing mechanism to provide relief during extraordinary economic emergencies. Current provisions only allowed for the suspension of tax increases for a limited period (2018-2020), leaving the government without the necessary tools to intervene when the base tax itself becomes a source of severe economic hardship. This bill seeks to establish a responsive and flexible safeguard for our citizens. By establishing a clear trigger for the temporary suspension or reduction of fuel taxes, this measure ensures that excise taxes on regular gasoline, unleaded premium gasoline, diesel-oil, kerosene and LPG may be suspended or reduced when warranted by prevailing economic conditions. This proposal balances responsible fiscal management and the government's duty to protect its people from inflationary pressures and global economic instability. By providing a predictable and swift relief mechanism, we can safeguard the welfare of every Filipino family and ensure the continued resilience of our national economy. Ultimately, tax relief in this context becomes a moral imperative that protects the basic human right to affordable necessities, ensuring that the weight of a global crisis does not fall most heavily on those least equipped to overcome it. In view of the foregoing, the immediate passage of this bill is earnestly sought. LOREN LEGARDA

ДЕНДІР Office of the ructarp TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 26 MAR -9 P3:56 First Regular Session SENATE RECEIVED BY: S. No. _ 1942 Introduced by Senator Loren Legarda AN ACT ESTABLISHING A FUEL TAX STABILIZATION MECHANISM THROUGH THE TEMPORARY SUSPENSION OR REDUCTION OF EXCISE TAX AND VALUE-ADDED TAX ON PETROLEUM PRODUCTS DURING PERIODS OF EXTRAORDINARY GLOBAL OIL PRICE INCREASES Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled

Section 1. Short Title. This Act shall be known as the "Fuel Price Relief Act"

Section 2. Declaration of Policy - Consistent with Section 5, Article II of the 1987

3 Constitution, which mandates the promotion of the general welfare as essential to the enjoyment of the blessings of democracy, it is hereby declared the policy of the State to protect the people from the adverse economic effects of soaring prices of basic commodities. Furthermore, pursuant to Section 9, Article II, the State shall ensure a rising 8 standard of living and an improved quality of life for all by mitigating the impact of global energy volatility on the cost of food, transport, and basic services. Finally, in line with the mandate under Section 28(1), Article VI to evolve a progressive and equitable system of taxation, the State shall provide a mechanism for the temporary relief of tax burdens on petroleum products during extraordinary global economic emergencies to prevent the disproportionate suffering of the vulnerable sectors of society.

Sec. 3. Definition of Terms. - For purposes of this Act:

(a) Dubai Crude Oil Price refers to the average price of Dubai crude oil based on the Mean of Platts Singapore (MOPS);

(b) Economic Emergency refers to a period characterized by extraordinary inflation, global supply chain disruptions, or geopolitical conflicts that result in the average price of Dubai crude oil reaching the threshold set in this Act, thereby threatening the country's food and energy security; (c) Excise Tax refers to the specific tax imposed under Section 148 of the National Internal Revenue Code (NIRC) of 1997, as amended, which is a fixed amount per liter or kilogram of petroleum products; (d) Fuel Crisis refers to a situation characterized by extraordinary increases in domestic fuel prices or disruptions in global petroleum supply which pose significant risks to inflation, transportation costs, or economic stability. This shall cover global supply disruptions and geopolitical conflicts. (e) Petroleum Products refers to refined and manufactured mineral oils and motor fuels, specifically: (i) Regular Gasoline refers to low-octane motor fuel typically used for spark- ignition internal combustion engines; (ii) Unleaded Premium Gasoline refers to high-octane motor fuel with specialized additives; (iii) Diesel Fuel Oil refers to any liquid fuel used in diesel engines; (iv) Kerosene refers to a combustible hydrocarbon liquid used widely in lamps and domestic heaters; and (v) Liquefied Petroleum Gas (LPG): Flammable mixtures of hydrocarbon gases used as fuel in heating appliances, cooking equipment, and vehicles; (f) Trigger Level refers to price of crude oil Eighty United States Dollars v USD 80 per barrel; (g) Trigger Period refers to the duration during which the price of Dubai crude oil stays at or above the threshold of Eighty United States Dollars (USD 80.00) per barrel; and (h) Value-Added Tax (VAT) refers to the consumption tax imposed under Section 106 and 107 of the NIRC, currently set at twelve percent (12%) of the gross selling price or import value.

Sec. 4. Suspension and/or Reduction of Excise Tax and/or Value-Added Tax (VAT).

The President of the Philippines is hereby authorized to suspend or reduce the excise tax

1 obligations on regular gasoline, unleaded premium gasoline, diesel fuel oil, kerosene, and liquefied petroleum gas (LPG); suspend or reduce the Value-Added Tax (VAT) imposed on the sale and importation of petroleum products; or implement a combination of both measures, following certain conditions have been met: (a) when the Trigger Period is signaled by petroleum price estimates according to Means of Platts Singapore (MOPS) or other internationally recognized benchmark as may be determined by the Department of Finance; (b) upon the recommendation of the Development Budget Coordination Committee (DBCC), in consultation with the Secretary of Energy; (c) In recommending the suspension or reduction of taxes under this section, the DBCC shall consider the following factors: * The prevailing inflation rate and its impact on the Consumer Price Index (CPI); (ii) The current fiscal deficit and revenue targets of the National Government; (iii) The stability of the Philippine Peso against the US Dollar; and (iv) The existence of a Fuel Crisis, global supply disruptions, geopolitical conflicts, or other extraordinary conditions affecting international oil markets; and (V) such other relevant economic indicators as the DBCC may deem necessary. The DBCC shall determine and recommend the appropriate tax or combination of taxes to be suspended or reduced under this section, including the applicable rate adjustments and the duration of such suspension or reduction, subject to the limits provided under this Act.

Sec. 5. Automatic Lifting of Suspension or Reduction. - The suspension or reduction

of taxes provided under this Act shall be automatically lifted, and the original tax rates under the NIRC shall be restored, when the average Dubai crude oil price falls below the Trigger Level for a period of thirty (30) consecutive days. The President may lift the suspension anytime within the thirty-day period upon consultation with the DBCC.

The suspension or reduction authorized under this Act shall remain in effect for 2 a period not exceeding ninety (90) days from the date of its implementation, provided 3 that the price of Dubai crude oil remains at or above the Trigger Level. If the price of Dubai crude oil continues to remain at or above the Trigger Level after such period, the suspension or reduction may be extended for another period not exceeding ninety (90) 6 days upon the joint recommendation of the DBCC and the Department of Energy (DOE), 7 and upon determination that the conditions constituting the Fuel Crisis continue to exist.

Sec. 6. Transparency and Reporting. - The DBCC and the Department of Energy

9 (DOE) shall submit a joint monthly report to the House of Representatives and Senate 10 Committees on Finance and the House Committee on Ways and Means on the status of global oil prices and the estimated revenue impact of any suspension and/or reduction active under this Act. The report shall also be made publicly available through the official websites of the DBCC and DOE.

Sec 7. Periodic Review and Adjustment of the Price Threshold.

(a) Biennial Review. - The Development Budget Coordination Committee (DBCC) and the Department of Energy (DOE), shall conduct a mandatory review of the Eighty United States Dollar (USD 80.00) threshold every two (2) years from the effectivity of this Act. (b) Adjustment Criteria. - The Secretary of Finance, upon recommendation of the Development Budget Coordination Committee (DBCC), may adjust the price threshold through the issuance of an Administrative Order. Any adjustment shall consider the following economic indicators, among others: (i) The Core Inflation Rate as determined by the Philippine Statistics Authority (PSA); (ii) Significant fluctuations in the Purchasing Power of the Peso and the USD-PHP exchange rate; and (jii) The Five-Year Moving Average of global crude oil prices, to ensure the threshold reflects the current "baseline" cost of energy. (c) Limitation on Adjustment. - No single adjustment shall increase or decrease the existing threshold by more than ten percent (10%) of its current value.

(d) Transparency Requirement. - Any proposed adjustment to the threshold must undergo at least one (1) public consultation with stakeholders from the transport, agricuitural, and industrial sectors, and shall take effect only thirty (30) days after its publication in the Official Gazette.

Sec. 8. Prohibition Against Hoarding, Profiteering, and Other Market Manipulation.

6 - No person, firm, or entity engaged in the importation, distribution, storage, or retail of 7 petroleum products shall engage in hoarding, profiteering, cartelization, or any act that 8 artificially restricts the supply or manipulates the price of petroleum products. The DOE, in coordination with the Department of Trade and Industry (DTI), the 10 Bureau of Customs (BOC), the Philippine Competition Commission (PCC), and other relevant agencies, shall monitor the inventory, importation, distribution, and pricing of petroleum products to ensure adequate supply and fair market practices. Any person or entity found to have engaged in such prohibited acts shall be subject to the appropriate administrative, civil, and criminal penalties under existing laws.

Sec. 9. Implementing Rules and Regulations (IRR). - Within fifteen (15) days from

the effectivity of this Act, the DOF shall promulgate the necessary rules and regulations to effectively implement the provisions of this Act.

Sec. 10. Separability Clause. - If any portion or provision of this Act is declared

unconstitutional, the remainder hereof or any provisions not affected thereby shall remain in force and effect.

Sec. 11. Repealing Clause. - All laws, presidential decrees, executive orders, letters

of instruction, administrative orders, rules, and regulations contrary to or inconsistent with the provisions of this Act are hereby repealed, modified, or amended accordingly.

Sec. 12. Effectivity. - This Act shall take effect immediately after its publication in

the Official Gazette or in a newspaper of general circulation. Approved,