Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

House Bill No. _2 15

Introduced by
KABATAAN Party-list Rep. RENEE LOUISE M. CO
and ACT Teachers Party-list Rep. ANTONIO L. TINIO

AN ACT
LOWERING THE PRICE OF OIL AND PETROLEUM PRODUCTS,
ELECTRICITY, WATER, TOLL FEES, AND FOOD AND OTHER BASIC
NECESSITIES, AMENDING FOR THIS PURPOSE REPUBLIC ACT NO. 10963 OR
THE TAX REFORM FOR ACCELERATION AND INCLUSION (TRAIN) LAW AND
REPUBLIC ACT NO. 8424 OR THE TAX REFORM ACT AS AMENDED BY
REPUBLIC ACT NO. 9337

EXPLANATORY NOTE

The House of Representatives has been given the exclusive mandate of originating tariff
bills. Both the 1973 (Article VIII, Section 17) and the 1987 (Article VI, Section 28) Philippine
constitution directed Congress to “evolve a progressive system of taxation".

A progressive system of taxation assumes the imposition of a heavier tax burden for those
who have larger incomes. Progressive taxes attempt to reduce the tax incidence of people with a
lower ability to pay. as they shift the incidence increasingly to those with a higher ability to pay.

However, bowing under pressures from the International Monetary Fund, successive post-
Martial Law administrations instituted a regressive system of taxation where the relative tax rate
or burden increases as an individual's ability to pay decreases, thereby imposing enormous tax
burdens on the poorest of the poor.

The Value-Added Tax (VAT), which is an indirect tax, is widely criticized as a regressive
form of taxation. VAT was first imposed under the Philippine taxation system by President
Corazon Aquino in July 1987 when she signed Executive Order 273. The VAT was further
institutionalized when former president Fidel Ramos signed into law RA 8424 or the Tax Reform
Act of 1997,

R.A. 8424 expanded the coverage of VAT to include basic necessities such as rice. com,
fresh, dried and canned fish, fresh pork, beef and poultry meat, fresh eggs, fresh vegetables, root
crops, coffee, sugar, cooking oil, salt, laundry soap, detergents, firewood, charcoal, candies, and
drugs classified as essential by the Department of Health.


This was further exacerbated when the value-added tax was perpetuated and its coverage
expanded by Republic Act 9337, which was signed into law by former President Gloria
Macapagal-Arroyo on 24 May 2005. Worse, under RA 9337, VAT was imposed on such socially
volatile products as gasoline and other petroleum products.

Filipinos are left without any reprieve from the barrage of oil price hikes since the start of
2022 even as the COVID-19 pandemic already pushed 26.14 million people into poverty. The
successive rounds of oi! price hikes have pushed transportation and production costs higher,
leading to a chain of commodity price hikes that severely affect low-income eamers.

The non-stop oil price hikes are made worse by the imposition of excise taxes on
petroleum under the Tax Reform for Acceleration and Inclusion (TRAIN) Law, and the 12
percent Value Added Tax (VAT) on petroleum products. These taxes aggravate the suffering of
public utility (PUV) drivers, who can barely feed their families with a very meager take-home
pay. Commuters meanwhile are made to shoulder the oil price hikes with fake hikes. Farmers and
fisherfolk are also experiencing heavy losses due to skyrocketing diesel, gasoline, and kerosene
prices.

This proposed measure seeks to:

1. Immediately lower the price of oil and other petroleum products by scrapping the excise
tax; and

2. Include in the list of exemptions under the E-VAT Law the following:

a. petroleum products;

b. electricity;
water;
toll fees;
basic necessities consumed on a regular basis by poor families, which include
bread; canned pork, beef, fish and other marine products; instant noodles;
biscuits; sugar (raw and refined); cooking oil; iodized salt; laundry soap;
detergents; firewood; charcoal; candles; and drugs classified as essential by the
Department of Health.

ges

Suspending the oil excise taxes as increased under the TRAIN will provide immediate
relief to Filipinos. This will remove Php3 from the price per kilo of liquefied petroleum gas
(LPG), lowering the price of an 11-kilo tank by Php33 not including VAT. The price per liter of
diesel can be immediately slashed by P6, and the price of unleaded gasoline by P5.35 per liter.

Summary of Proposal
To Scrap Excise Taxes on Oil and Petroleum Products

Current Excise Tax
under TRAIN Law
(per kilo/ liter)
Lubricating oils and greases P10.00
Processed gas P10.00
Waxes and petrolatum P10.00
Denatured alcohol P10.00
‘Naphtha, regular gasoline P10.00
Leaded premium gasoline NA
Unleaded premium gasoline P10.00
Aviation fuel and gas 4,00



Kerosene P5.00
Diesel fuel oil P6.00
Liquefied petroleum gas 3.00
Asphalts P10.00
Bunker fuel oil P6.00
Petroleum coke P6.00

According to think tank IBON Foundation, oil revenue losses can be offset by also
suspending corporate income tax (CIT) cuts under the Corporate Recovery and Tax Incentives for
Enterprises Act or CREATE. The group noted that the government projects revenue losses of
Php115. billion in 2021 and Php101.8 billion in 2022 from CREATE'’s CIT cuts. Reducing
indirect consumption taxes such as on oil and increasing direct taxes on income makes the tax
system more progressive

VAT, an indirect and “passable” tax, comers poor end-users who are not in a position to
further pass on the tax. It is an "end of the line" tax. Everyone else in front or in between this line
has the capacity to be immune. Worse, given the inefficiency of our country's tax collection and
administration, those who can pass on this tax may even stand to profit from its imposition via the
input and output VAT scheme, among others.

VAT isa tax on the poor and the government certainly has many other options. The end=
users, especially those steeped in poverty, should not be made to pay for the government's
inefficient tax collection. No amount of government explanation can justify the creation or
imposition of taxes that will mostly impact on the poorest of the poor, especially amid the
economic fallout of the COVID-19 pandemic and worsening economic crisis. Even in the face of
a fiscal crisis which admittedly calls for revenue generation, the government has the burden of
proving that all other options are absolutely unavailable before it can even sell the idea of further
taxing the poor.

Taking the foregoing into consideration, VAT cannot be said to be a fair, just, equitable
and progressive form of taxation. Thus, poor end-users have all the reasons to strongly oppose the
imposition of VAT.

Removing the VAT on electricity, water, toll fees, certain food, and other basic
necessities would provide relief to a large number of consumers and stimulate economic activity
especially as more Filipinos have slid down to the ranks of the poor and unemployed. These
savings mean more money for consumers to spend directly on their needs and less production
cost for fucl-intensive businesses.

If needed, there are available alternatives to VAT—alternatives that do not promote a
regressive form of taxation but rather a progressive system of taxation that our Constitution
mandates this august body to evolve. There are available revenue measures that do not further
burden the poorest of our constituents.

Oppositors of VAT point out that instead of burdening the poor with increases in taxes,
the government could have reviewed the tax exemptions being provided mostly to the benefit of
large corporations under the Corporate Recovery and Tax Incentives for Enterprises (CREATE)
Law amounting to P251 billion for 2020 and 2021. These alone are enough measures to
counterbalance the unjust imposition of VAT on oil and petroleum products as well as basic
necessities that poor families consume on a daily basis.


For the foregoing reasons, the passage of this bill is sought.

Rep. RENEB/LOUISE M. CO 6p. ANTONIO L. TINIO
KABATAAN Party-List ACT Teachers Party.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

215

House Bill No.

Introduced by
KABATAAN Party-list Rep. RENEE LOUISE M. CO
and ACT Teachers Party-list Rep. ANTONIO L. TINIO

AN ACT
LOWERING THE PRICE OF OIL AND PETROLEUM PRODUCTS,
ELECTRICITY, WATER, TOLL FEES, AND FOOD AND OTHER BASIC
NECESSITIES, AMENDING FOR THIS PURPOSE REPUBLIC ACT NO. 10963 OR
THE TAX REFORM FOR ACCELERATION AND INCLUSION (TRAIN) LAW AND
REPUBLIC ACT NO. 8424 OR THE TAX REFORM ACT AS AMENDED BY
REPUBLIC ACT NO. 9337

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:

SECTION 1. This Act shall be known as “Presyo Ibaba Act of 2025”.

SECTION 2. Section 43 of Republic Act 10963 is hereby amended to read as follows:
“Section 43. Petroleum Products. - The excise tax on petroleum products under
this Act is hereby repealed. Accordingly, no excise tax shall be imposed on the
following products:

(A) Lubricating oils and greases; processed gas; waxes and petroleum;
denatured alcohol to be used for motive power;

(B) Naphtha, regular gasoline, and other similar produets of distillation;
(C) Leaded and unleaded premium gasoline;

(D) Aviation turbo jet fuel;

(E) Kerosene;

(F) Diesel fuel oi

(G) Liquefied petroleum gas;


(H) Asphalts;
(J) Bunker fuel oil and on similar products;
(J) Petroleum coke; and
(&) Any other products classified as petroleum products”

SECTION 3, Section 109 (1), Chapter 1, Title IV of the National Intemal Revenue Code as

amended is hereby amended by inserting paragraphs B and C and re-letter the succceding
paragraphs, to read as follows:

Section 109. Exempt Transactions. — (1) Subject to the provisions of subsection (2)
hereof, the following transactions shall be exempt from the value-added tax:

(A) xxx

“(B) THE SALE OF OIL, GASOLINE, LPG, KEROSENE AND OTHER
PETROLEUM PRODUCTS;

“(C) THE SALE OF ELECTRICITY BY GENERATION, TRANSMISSION
AND DISTRIBUTION COMPANIES AND ELECTRIC COOPERATIVES,

“(D) SERVICES OF FRANCHISE GRANTEES OF ELECTRICITY
UTILITIES;

“(E) SALE OR IMPORTATION OF MACHINERIES AND EQUIPMENT,
INCLUDING SPARE PARTS, TO BE DIRECTLY USED BY THE BUYER OR
IMPORTER THEMSELF IN THE GENERATION, TRANSMISSION, AND
DISTRIBUTION OF ELECTRICITY;

“(F) SALE OF WATER UTILITIES;
“(G) SERVICES OF FRANCHISE GRANTEES OF WATER UTILITIES;

“(H) SALE OR IMPORTATION OF MACHINERIES AND EQUIPMENT,
INCLUDING SPARE PARTS, TO BE DIRECTLY USED BY THE BUYER OR
IMPORTER THEMSELF IN THE OPERATING, MAINTAINING,
IMPROVING, AND EXPANDING DISTRIBUTION OF POTABLE WATER BY
WATER UTILITIES;

“(I) SERVICES RENDERED BY TOLLWAY OPERATORS;

"(J) SALE OR IMPORTATION OF BASIC NECESSITIES CONSUMED ON A
REGULAR BASIS BY POOR FAMILIES, WHICH INCLUDE BREAD;
CANNED PORK, BEEF, FISH AND OTHER MARINE PRODUCTS; INSTANT
NOODLES; BISCUITS; SUGAR (RAW AND REFINED); COOKING OIL;
IODIZED SALT; LAUNDRY SOAP; DETERGENTS; FIREWOOD;
CHARCOAL; CANDLES; AND DRUGS CLASSIFIED AS ESSENTIAL BY
THE DEPARTMENT OF HEALTH;


SECTION 4. Implementing Rules and Regulations. The Secretary of Finance and Secretary
of Trade and Industry shall, upon the recommendations of the Commissioner of Internal
Revenue, promulgate not later than 15 days upon the effectivity of this Act, the necessary
Rules and Regulations. All former rules and regulations pertaining to value-added tax on
basic commodities commonly consumed by poor Filipinos shall be deemed revoked.

SECTION 5. Separability Clause. Any provision or portion of this act that may be declared
unconstitutional shall not have the effect of nullifying other parts thereof.

SECTION 6. Repealing Clause. All laws, acts, decrees, executive orders, issuances, and
rules and regulations or parts thereof which are contrary to, and inconsistent with any
provisions of this Act are hereby repealed, amended, or modified accordingly.

SECTION 7. Effectivity Clause. This Act shall take effect fifteen (15) days after its
complete publication in the Official Gazette or in newspaper of general circulation.

Approved,