The summer months are heating up, and so are congressional hearings about the government’s response to the global oil crisis.

Last April 15, the economic managers appeared before the House of Representatives to explain why the government is seemingly holding back when it comes to suspending fuel taxes. While President Ferdinand Marcos Jr. already suspended the excise tax on kerosene and LPG, he hasn’t done so for diesel and gas.

House ways and means committee chairman Miro Quimbo presented data purporting to show that diesel and gasoline take up a roughly equal share of household income across all income groups — around 12 to 13%. The implication is that fuel excise taxes burden the poor just as much as the rich, so the taxes should be suspended.

There’s just one problem: no methodology has been made public, so the numbers cannot be independently checked. Using the 2023 Family Income and Expenditure Survey (FIES) microdata, the actual shares are about six times smaller — around 2 to 2.5% of household income — and relatively flat across deciles (see Figure 1).

A gap that large is more likely a definitional difference (for example, a different denominator, or indirect fuel use traced through input-output links) than an arithmetic error. But without disclosure, we can’t really tell. The committee should ask its staff to release the underlying computation.

Figure 1.

A few weeks ago, former representative Raoul Manuel showed on Facebook data that seemingly proves that poor households are burdened the most by diesel and gas taxes. But he (or the one who crunched the numbers) used non-standard methodology that includes only households that spend any amount at all on fuel directly.

Specifically, they divided total fuel spending by wage income, conditional on households that directly purchased fuel. Two problems follow. First, most poor households don’t buy diesel or gasoline directly (they consume fuel indirectly through jeepney fares, food prices, and goods prices) so conditioning on direct buyers drops them from the sample and mechanically inflates the ratio for those who remain.

Second, wage income understates total income for poor households, who also rely on transfers, self-employment, and farm income. The right object for policy is the unconditional burden across all households, not the conditional burden among direct buyers (see Figure 2).

If we can’t even agree on what the data say, evidence-based policymaking becomes impossible.

Figure 2.

Are fuel taxes regressive?

The claim that fuel taxes are “regressive” — that they hurt the poor more than the rich — is one of the most persistent myths in Philippine fiscal policy debates. It sounds intuitive: everyone needs fuel, so a flat per-liter tax must weigh more heavily on those with less.

But the data tell a different story.

In a policy note I published in March, I used the FIES 2023 and the Philippine input-output table to trace who actually bears the burden of fuel excise taxes. The bottom 30% of households would capture only about 17% of any forgone gasoline excise revenue, and just 2.5% of forgone diesel excise revenue. The top 30% would capture 48% of gasoline and 85% of diesel. The richest tenth of Filipino households alone would pocket 54% of any diesel tax break. (These estimates combine direct household fuel purchases from FIES with indirect fuel use traced through the Philippine input-output table, assuming full forward pass-through of excise taxes to final consumers — the standard assumption in the incidence literature.)

That makes fuel excise taxes, at worst, roughly proportional — and mildly progressive once indirect effects are traced through the input-output table. But the decisive point for policy is not the exact shape of the burden; it’s the shape of the benefit from suspension. In this sense, it effectively becomes a gift to higher-income, car-owning households. A tax suspension is regressive in its distributional impact, even if the tax itself is not. Suspending fuel excises would be a gift to the top deciles, not to the jeepney-riding poor.

Recent Philippine evidence points the same way for the value-added tax (VAT). In a PhD dissertation at the UP School of Economics, my friend Mae Hyacinth Kiocho conducted an incidence analysis of consumption taxes and social spending using government surveys and finds that the VAT, as implemented, is closer to proportional than regressive.

The mechanism is straightforward: basic food, education, and health (which make up a larger share of poor households’ budgets) are already VAT-exempt, while the taxable goods fall more heavily on higher-income consumption baskets. This is consistent with earlier work by the Philippine Institute for Development Studies and the World Bank on Philippine tax incidence.

These findings run counter to the conventional wisdom repeated in congressional hearings and talk shows. The difference is that they are based on data, not vibes.

Credit where it’s due

Despite signing Republic Act 12316 in March (the law that authorizes him to suspend fuel excise taxes when Dubai crude breaches $80 per barrel) Marcos has not actually exercised that authority. He has, in effect, sat on the law.

His economic managers, particularly at the Department of Finance (DOF) and the Development Budget Coordination Committee (DBCC), have been pushing back against congressional pressure to suspend the excise taxes. They understand, again on the basis of data, that a blanket suspension would cost over a hundred billion pesos while delivering most of the benefit to the richest households. Oil prices have also eased somewhat from their peaks, reducing the urgency.

The April 2026 World Economic Outlook of the International Monetary Fund (IMF) backs this position. The IMF explicitly warns against broad-based fiscal packages in response to the oil shock, recommending instead that fiscal support be “targeted, timely, temporary, and funded within current budget envelopes by reprioritizing spending.” That is essentially what the Philippine economic managers have been arguing for.

But this is not to say that the government is doing a fantastic job amid the crisis. They need to beef up efforts on the other side of the equation: the targeted relief that should substitute for the excise suspension.

Cash transfers to the poorest households have been slow. The expanded Pantawid Pasada for public utility vehicle drivers took weeks longer than it should have. Ayuda distribution remains plagued by leakage, poor targeting, and delays. And the loss of Listahanan, the DSWD’s master list of poor households, has made targeting even harder.

What needs to happen

As the crisis persists, the fuel excise tax debate will not go away. Oil prices remain volatile, and the political temptation to suspend taxes will return every time prices spike. To resist that temptation, the government needs to get two things right.

First, invest aggressively in ayuda delivery systems. Fix the beneficiary databases. Accelerate digitization. Make it so that the next time oil prices surge, targeted assistance can be deployed within days, not weeks. If the targeting infrastructure works wonders, the case for blanket tax cuts collapses.

Second, as we craft economic policy in these troubled times, we need to double down data sharing and transparency. Congressional hearings would go much more smoothly if data presented to justify legislation are accompanied by replication materials — the dataset, the methodology, and ideally the code. If the numbers presented can’t survive scrutiny, they shouldn’t be shaping policy. (The data and code used for my own policy note about fuel tax suspension are uploaded on Github for anyone to check.)

The evidence is clear: fuel excise taxes in the Philippines are not regressive, and neither is the VAT. These are not opinions: they are findings from household survey data that anyone can verify. The question is whether our lawmakers (and other policy stakeholders) are willing to engage with the evidence, or whether they’ll keep pushing numbers that don’t add up. – Rappler.com

Dr. JC Punongbayan is an assistant professor at the UP School of Economics and the author of False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them. In 2024, he received The Outstanding Young Men (TOYM) Award for economics. Follow him on Instagram (@jcpunongbayan).

Click here for more In This Economy articles