The Philippine government is ending the temporary excise tax suspension on kerosene and liquefied petroleum gas (LPG) on July 8, the Bureau of Internal Revenue (BIR) announced. The suspension terminates after the Department of Energy (DOE) certified that the one-month average Dubai crude oil price from June 1 to 30 stood at $79.45 per barrel, falling below the $80-per-barrel threshold set under Executive Order No. 114. President Ferdinand Marcos Jr. had ordered the tax break for up to three months to shield consumers from surging oil prices triggered by the Middle East war, with automatic termination if Dubai crude averaged below $80 per barrel over one month. The suspension had provided direct savings of around P5.65 per liter of kerosene and almost P37 for an LPG tank.
BIR Restores Excise Tax Rates on Kerosene and LPG
The BIR confirmed that excise tax rates on kerosene and LPG will revert to the rates prescribed under the National Internal Revenue Code beginning July 8. The DOE certified that the one-month average Dubai crude oil price from June 1 to 30 stood at $79.45 per barrel, just below the $80-per-barrel threshold. Executive Order No. 114 stipulated automatic termination of the tax suspension if the one-month average Dubai crude price fell below $80 per barrel.
Tax Suspension Saved Consumers P5.65 Per Liter on Kerosene
When the suspension was announced, the Palace stated that the removal of the tax was equivalent to around P5.65 per liter of kerosene and almost P37 for an LPG tank. With the tax restored, that cushion disappears. However, pump prices and LPG prices do not move based on taxes alone—oil firms also factor in international prices, the peso-dollar exchange rate, shipping and import costs, and when their existing fuel stocks were purchased. This means consumers may not necessarily see the full tax impact all at once.
Government Foregoes P4.1 Billion in Revenue During Suspension
The Department of Finance estimated that suspending excise taxes on kerosene and LPG for the maximum three-month period would cost the government around P4.1 billion in foregone revenues. While kerosene and LPG account for a smaller share of tax revenue than diesel and gasoline, their excise taxes remain a meaningful revenue source.
DOE Cites Dubai Crude Price Drop Below $80 Threshold
DOE Undersecretary Alessandro Sales explained that while Dubai crude had already fallen below the $80 marker, local pump prices are more closely tied to regional prices of finished petroleum products, such as gasoline, diesel, and kerosene. Sales noted that while Dubai crude had returned to pre-war levels, MOPS diesel remained elevated. Before the fighting involving Iran and US-Israeli forces began on February 28, MOPS diesel was at $92.37 per barrel. Last Friday, it closed at $114.73 per barrel. The DOE stated that fuel prices may normalize within one to two months if there are no further disruptions in global supply routes.
Oil Firms Raise Diesel and Kerosene Prices for July 7-13 Week
For the week of July 7 to 13, oil firms were allowed to raise pump prices. Diesel prices were set to increase by P1.57 to P3.57 per liter, while kerosene prices were set to rise by P1.70 to P3.70 per liter. Gasoline adjustments ranged from a rollback of P1.75 per liter to an increase of up to 25 centavos per liter. DOE monitoring showed common Metro Manila retail prices from June 30 to July 6 at P70 per liter for gasoline RON95, P69 for gasoline RON91, P69.90 for diesel, and P98.50 for kerosene.
FAQ
Why did the Philippine government suspend excise taxes on kerosene and LPG?
President Ferdinand Marcos Jr. ordered the temporary suspension for up to three months to shield consumers from surging oil prices triggered by the Middle East war. Executive Order No. 114 set the suspension with automatic termination if the one-month average Dubai crude price fell below $80 per barrel.
How much did consumers save during the tax suspension on kerosene and LPG?
The Palace stated that the tax removal was equivalent to around P5.65 per liter of kerosene and almost P37 for an LPG tank. With the tax restored on July 8, these savings disappear.
When will fuel prices normalize in the Philippines after the tax suspension ends?
The DOE stated that fuel prices may normalize within one to two months if there are no further disruptions in global supply routes. DOE Undersecretary Alessandro Sales noted that while Dubai crude had returned to pre-war levels, MOPS diesel remained elevated at $114.73 per barrel as of last Friday, compared to $92.37 per barrel before the conflict began on February 28.
