Exporters have renewed their strong support for the proposed suspension of value-added tax (VAT) on fuel, stressing that rising fuel prices continue to strain not only production but more critically the transportation and movement of goods across supply chains—driving up costs for both businesses and consumers.
The Philippine Exporters Confederation Inc. (PHILEXPORT) said exporters are heavily dependent on transport and logistics networks to move goods from factories to ports and ultimately to global markets, making fuel costs a direct factor in export competitiveness.
PHILEXPORT President Sergio R. Ortiz-Luis Jr. said elevated fuel prices are cascading across the entire value chain, increasing logistics expenses, squeezing margins, and weakening the ability of Philippine exporters—especially micro, small, and medium enterprises (MSMEs)—to compete internationally.
“Fuel is a fundamental input not only in production but in the movement of goods. Every increase in transport and logistics cost directly affects exporters’ competitiveness. Reducing the tax burden on fuel will help stabilize operational costs and ease pressure across supply chains,” Ortiz-Luis said.
He reiterated the group’s support for the proposed suspension of VAT on fuel products, particularly backing the legislative initiative of Senator Loren Legarda, which seeks to provide temporary relief amid persistent inflationary pressures.
Ortiz-Luis described the measure as a timely intervention that would help ease transportation bottlenecks, stabilize prices of goods, and support both business continuity and consumer welfare.
Recent government and economic data indicate that suspending fuel taxes, including VAT, could deliver immediate relief across sectors:
• Fuel price reductions of up to ₱6 per liter for diesel and ₱10 per liter for gasoline, easing transport and logistics costs.
• Household impact: Previous suspensions led to cuts of about ₱5.60 per liter for kerosene and ₱3.36 per kilogram for LPG, or roughly ₱37 savings per household tank.
• Inflation management: Economic projections suggest inflation could be contained at 3.6% to 4.2% with the measure, compared to potential spikes of up to 7.5% without intervention.
Ortiz-Luis warned that sustained high fuel prices ripple through the economy, as transport costs are passed on to food, medicine, and other essential goods, disproportionately affecting low- and middle-income households.
While acknowledging fiscal concerns, including estimated revenue losses of around ₱136 billion from excise tax and VAT adjustments, he stressed that improved economic activity, preserved jobs, and stronger consumption could help offset long-term impacts.
“Targeted and time-bound relief measures such as suspending VAT on fuel are critical to sustaining economic momentum, supporting exporters who rely heavily on transport systems, and shielding consumers from further price shocks,” Ortiz-Luis added.
He urged policymakers to act swiftly on the proposal and adopt balanced measures that safeguard both fiscal stability and economic resilience while keeping goods moving efficiently across the supply chain.