Rising global oil prices have prompted President Ferdinand R. Marcos Jr. to suspend excise taxes on liquefied petroleum gas (LPG) and kerosene for up to three months.
Marcos issued Executive Order (EO) 125 on Friday, Sept. 25, ordering the full suspension of excise taxes on LPG, except when used as raw material in producing petrochemical products or for motive power, and on kerosene, except when used as aviation fuel.
The order followed a recommendation from the Development Budget Coordination Committee (DBCC) after the Department of Energy (DOE) certified that the one-month average price of Dubai crude reached USD99.41 per barrel from Aug. 13 to Sept. 11.
The average was above the USD80-per-barrel threshold set under Republic Act (RA) No. 12316, which allows the President to suspend or reduce excise taxes on specified petroleum products under certain price conditions.
EO 125 directs the DBCC, in coordination with the DOE, to review the tax suspension and submit reports to the House of Representatives and Senate as required under the law.
The DBCC may recommend to Marcos whether to continue, modify, extend or terminate the suspension based on the reports.
The excise tax rates will automatically return to those prescribed under Section 148 of the National Internal Revenue Code, as amended, one week after the DOE certifies that the one-month average Dubai crude price has fallen below USD80 per barrel, or upon the expiration of the three-month suspension.
No separate issuance will be needed for the automatic restoration of the tax rates.
The DOE and Department of Finance (DOF), through the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC), were ordered to conduct an inventory of existing LPG and kerosene stocks and ensure compliance with EO 125.
The BIR and BOC must also provide the House of Representatives with monthly information on the declared value and volume of petroleum products covered by the order.
The DOE, meanwhile, must require oil companies to submit monthly information on the cost components of LPG and kerosene during the tax suspension period.
EO 125 takes effect immediately upon its publication in the Official Gazette or in a newspaper of general circulation.
RA 12316 authorizes the President, upon the recommendation of the DBCC and in coordination with the DOE, to suspend or reduce excise taxes on specified petroleum products when the one-month average Dubai crude price reaches or exceeds USD80 per barrel.
The law allows the relief for up to three months.
Marcos had previously suspended excise taxes on LPG and kerosene for three months in April following another DBCC recommendation. The earlier suspension was issued through EO 114.
Photo courtesy of Rappler
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