Philippine President Ferdinand Marcos Jr. is advancing legislation to grant his administration direct authority to reduce oil excise taxes, aiming to lower fuel prices and ease inflationary pressures. The move is paired with new worker safety mandates across energy and infrastructure projects.
- President Marcos proposes authority to reduce oil excise taxes by up to 15%
- CL=F averaged $89.40/bbl in February 2026, driving domestic fuel price increases
- New safety rules require mandatory audits and training, raising sector costs by 3%-7%
- PSEi rose 1.3% on policy announcement; PHS gained 2.1%
- Targeted diesel price drop of 6%-8% if tax cuts are enacted
- Policy tied to 2028 election strategy and fiscal policy balancing act
President Ferdinand Marcos Jr. has introduced a legislative proposal granting the executive branch discretionary power to adjust oil excise taxes, a shift from the current fixed-rate regime. The measure, now under congressional review, would allow temporary reductions of up to 15% on fuel taxes, with the aim of stabilizing consumer prices amid global volatility in crude oil markets. The change targets refined petroleum products, including gasoline and diesel, whose retail prices have risen 12% year-to-date on the back of international benchmark CL=F, which averaged $89.40 per barrel in February 2026. The proposed tax flexibility comes as part of a broader infrastructure and energy reform package. Concurrently, the government is drafting new safety protocols requiring all energy and construction firms to comply with stricter occupational health standards by Q3 2026. These include mandatory safety audits, enhanced training for field personnel, and real-time incident reporting systems. Compliance is expected to increase operational costs by an average of 3% to 7% across the sector, with firms like Philippine National Oil Company (PNOC) and major contractors involved in LNG and power grid upgrades most affected. Market indicators suggest the policy could influence both inflation and investor sentiment. The PSEi Index rose 1.3% on the announcement, reflecting optimism around lower energy costs, while energy stocks including Petron Corporation (PHS) saw a 2.1% gain. Analysts note that if tax cuts are implemented, diesel prices could decline by 6% to 8% by mid-year, directly benefiting transport and logistics firms. However, the long-term fiscal impact remains uncertain, particularly given the government's 2026 budget deficit target of 2.8% of GDP. The initiative is seen as a strategic move ahead of the 2028 election cycle, balancing populist economic messaging with regulatory modernization. While the tax authority provision remains contentious among fiscal watchdogs, the government argues it is essential for rapid response to supply shocks. The final outcome will depend on legislative negotiations and the interplay between inflation control, public safety, and fiscal sustainability.