President Ferdinand R. Marcos Jr. announced on Monday that the government will maintain the Value-Added Tax (VAT) on petroleum products, citing the necessity of these revenues to fund nationwide social programs and public assistance initiatives.
During a Palace press briefing, the President addressed calls to suspend the tax amid fluctuating global oil prices. He explained that while higher crude prices increase the cost of fuel, they also result in a “windfall” of VAT collections—extra funds that the government reallocates to provide relief to various sectors of society.
“The VAT on petroleum products allows us to capture extra funds when crude prices rise,” President Marcos stated. “If we remove the VAT on petroleum products alone, it primarily benefits the petroleum market. By keeping it, we can use those revenues to help the entire society, not just those directly in the transport sector.”
The Chief Executive emphasized that the government’s responsibility extends beyond a single industry. He noted that many citizens have questioned why aid is often concentrated on transport workers, stressing the need for a balanced distribution of resources.
The President highlighted several key reasons for maintaining the current tax structure:
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Sectoral Inclusivity: Revenue from fuel VAT is used to fund subsidies and cash aid for non-transport sectors that are also feeling the weight of inflation.
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Resource Mobilization: The “windfall” profits from imports at current VAT rates provide the liquidity necessary for the government to respond to urgent national needs.
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Cost-Benefit Analysis: Current assessments show that the benefit of collecting VAT to fund broad-based social safety nets outweighs the localized impact of a tax reduction on fuel.
While the VAT remains in place for now, President Marcos reassured the public that the administration is not closing its doors to future adjustments.
“There is nothing that we are not looking at as a possible option. We are looking at all the options,” the President said, adding that any future decision to reduce VAT on any product would require rigorous study.
The administration remains focused on “normalizing people’s lives” through targeted subsidies and cash benefits, ensuring that the most vulnerable populations receive the support they need during periods of global economic volatility.
