Senate panel proposes 'windfall tax' on oil profits

MANILA, Philippines — A preliminary committee report from the Senate recommended the imposition of a "windfall tax" on oil companies as fuel prices continue to soar due to instability in the Middle East.

The draft report came from the Senate ad hoc committee formed in response to the ongoing fuel crisis. Committee chair Sen. Sherwin Gatchalian released a copy to the media on Wednesday, April 1.

The report recommended imposing a windfall tax on oil firms' excess profits during price surges due to factors outside operational gains. This would apply during periods of elevated global prices caused by external supply shocks.

Gatchalian said the proposed levy aims to facilitate "short-term redistribution through targeted fuel subsidy programs."

Other policy options

The report made several recommendations, including the adoption of a National Contingency Plan. Despite the Philippines declaring a national energy emergency, the committee found there was a lack of coordinated response to the crisis.

Apart from designating clear roles, the contingency plan would also include planning for strategic national reserves for vital commodities such as fuel and food.

The panel also backed the temporary removal of the value-added tax on fuel products at the importation level to reduce prices at the pump.

Congress has already granted President Ferdinand Marcos Jr. emergency powers to suspend the excise tax to ease fuel prices. But Marcos has yet to exercise these powers, and experts say this would not significantly reduce prices as pump prices hit triple digits.

Senate President Tito Sotto has filed a measure amending the oil deregulation law, seeking to return regulatory powers to the government.

While Marcos said such measures are not off the table, he is focused on more immediate action plans.