By Benjamin Cuaresma
MANILA, Philippines — The government’s latest suspension of excise taxes on liquefied petroleum gas and kerosene is unlikely to provide more than modest savings to consumers, with analysts warning that the relief could quickly be swallowed by rising international fuel costs.
The tax suspension, ordered by President Ferdinand Marcos Jr. under Executive Order No. 125, is expected to shave only about P3 per kilogram from LPG prices, according to Arnel U. Ty, founder of the LPG Marketers Association.
Ty said the expected reduction could be overtaken by a larger LPG price increase anticipated in October, limiting the immediate impact of the tax relief.
“The suspension of excise tax for [LPG] will only reduce P3 per kg, while the incoming [LPG] price increase this coming October will [be] higher [than] the suspension of excise tax,” Ty said.
The measure is also unlikely to translate into substantial savings for small businesses such as restaurants, Ty said, because fuel represents only one portion of their overall operating costs.
He said LPG supplies remain available in the international market, but purchasing at elevated prices continues to pose a challenge for buyers.
“There are enough supply in the international market, if you can afford to buy in a high price,” Ty said, while noting that global fuel consumption has declined by 30%.
For poorer households, the savings could be even smaller.
Jose Enrique “Sonny” A. Africa, executive director of IBON Foundation, estimated that only 7.1 million of the 13.7 million families in the poorest half of the population use LPG.
These households generally consume only four to six 11-kilogram LPG tanks annually. Even if the tax suspension remained in effect for a full year, Africa estimated their savings at only about P13 to P18 a month.
That would leave roughly 6.8 million families, or 49% of the poorest half, without any benefit from the LPG excise-tax suspension, according to Africa’s estimates.
Kerosene users among the poorest households are fewer still, with Africa putting the number at about 934,000 families, or less than 7% of the poorest half. Their estimated monthly savings would amount to only P4 to P6.
Africa described the tax suspension as a limited intervention that, in his view, would not significantly ease the burden of high prices on poor and low-income families.
The government’s action covers LPG and kerosene under specific exemptions. LPG used as raw material for petrochemical production or for motive power is excluded, while the suspension on kerosene does not cover its use as aviation fuel.
The temporary suspension will not remain indefinitely. Under EO 125, the excise taxes will automatically return to their existing rates under Section 148 of the National Internal Revenue Code once Dubai crude falls below $80 per barrel or three months have elapsed from the order’s effectivity, whichever comes first.
The Department of Energy, together with the Department of Finance through the Bureau of Internal Revenue and Bureau of Customs, was also directed to monitor covered LPG and kerosene stocks and submit monthly reports to the House of Representatives detailing their volume and value.
The excise taxes on diesel and gasoline remain unchanged.
The order was triggered after the Department of Energy certified on September 11 that the 30-day average price of Dubai crude had reached $99.41 per barrel. The Development Budget Coordination Committee subsequently recommended the temporary full suspension under Resolution No. 2026-11.
The authority comes from Republic Act No. 12316, which allows the President, upon the DBCC’s recommendation and in coordination with the Energy Secretary, to suspend or reduce petroleum excise taxes when the one-month average Dubai crude price reaches or exceeds $80 per barrel.
It is the second time this year that Marcos has used the authority. The first suspension of LPG and kerosene excise taxes was imposed for three months in April.
For consumers facing elevated fuel costs, however, the latest tax break may amount to only a narrow cushion—with analysts warning that the savings could prove too small to make a significant dent in household and business expenses.
ia/xf
