Business group pushes for fuel tax suspension

PCCI: Use Malampaya funds to offset revenue losses

MANILA, Philippines — The country’s largest business organization is pushing for the suspension or reduction of excise tax and value-added tax (VAT) on fuel to provide immediate relief to both businesses and consumers as the country continues to reel from the Middle East crisis.

In a position paper, the  Philippine Chamber of Commerce and Industry said revenue losses from its proposal could be offset using the Malampaya energy dividend. PCCI noted that energy and transport costs account for a significant portion of total business overhead expenses.

“The success of the Malampaya Phase 4 Drilling Campaign provides a unique fiscal shock absorber that did not exist in previous years. We propose the use of the energy dividend from newly discovered indigenous gas fields to offset tax revenue losses,” the group said.

While acknowledging the fiscal implications of suspending or reducing the fuel taxes, the PCCI noted that the multiplier effect of reduced operational costs for industries and for micro, small and medium enterprises (MSMEs) as well as stabilization of consumer prices can outweigh the immediate loss in tax revenue.

“While the projected P136 billion revenue loss for 2026 is a serious concern, a stagnant economy characterized by shuttered businesses and weakened consumer demand would be far more costly in the long run,” the PCCI said.

It explained that the continuous increase in fuel prices is leading to thinner margins and forcing businesses to either cut personnel or risk insolvency.

Philippine Exporters Confederation Inc. president Sergio Ortiz-Luis Jr. said that exporters are also backing the proposed suspension of VAT on fuel to temper the rising production, transport and logistics costs and allow businesses, particularly MSMEs, to sustain operations.

“Fuel is a fundamental input across industries. Reducing the tax burden on fuel will have a cascading positive effect, lowering operational expenses and ultimately stabilizing prices of goods and services,” Ortiz-Luis said.

He also emphasized that the broader economic benefits, including sustained business activity, preserved jobs and stronger consumer demand can help offset fiscal losses over time.

“Targeted, time-bound relief measures such as the suspension of VAT on fuel are critical to safeguarding economic momentum, supporting exporters and protecting Filipino consumers from further price shocks,” Ortiz-Luis maintained.

Apart from the use of Malampaya funds, the PCCI is also recommending the immediate increase in exploration wells across pre-determined areas in line with the push for energy sovereignty.

In addition, the PCCI is pushing for enhanced fiscal perks for firms that commit to multi-well drilling programs in key onshore and offshore basins for gas and petroleum exploration in the next 24 months.

In particular, it cited the West Philippine Sea, Palawan blocks and Liguasan Marsh.

Furthermore, the PCCI is also batting for the grant of Project of National Significance status to all approved petroleum and gas developments to prevent third party interventions that could threaten national energy security.

It also recommended that all service contracts approved by the Department of Energy be automatically granted green lane status to fast-track the approval of all environmental and operational permits within 30 days.

“We urge the national government to act with the decisiveness and urgency this crisis demands,” the PCCI said.