We must be ready to make adjustments

IT is indeed unfortunate that our implementation of our new tax reform law – the Tax Reform for Acceleration and Inclusion (TRAIN) – coincided with United States President Donald Trump’s rejection of a 2015 nuclear arms control deal with Iran, and his threat of new economic sanctions if Iran does not totally drop its nuclear program and pull out of the ongoing Syrian war.

After the US issued its demands last Monday, fears of a big drop in Iranian oil exports drove world oil prices to multi-year highs. The global benchmark hit $80.50 a barrel, the highest since November, 2014, but subsided after other oil-producing countries in the Organization of Petroleum-Exporting Countries (OPEC) announced they may increase their output by June if the upward trend continued. But fears persist that world prices will continue to rise in the coming months, perhaps even reaching the $100 level of 2012.

Last May 15, following the initial round of jitters over the US withdrawal from the Iran deal, Philippine oil companies announced substantial increases in their prices – R1.20 per liter more for diesel, R1.10 for gasoline, and R0.95 for kerosene. Then a week later, on May 21, another round of hefty price increases was announced – R1.15 for diesel, R1.60 for gasoline, and R1 for kerosene.

This was, unfortunately, about the same time that the new TRAIN law raised the excise tax on diesel, which immediately raised the cost of transporting consumer goods to market. Stores in turn raised their prices – a R12 can of sardines now cost R16, etc.

Jeepney drivers and operators are now asking the Land Transportation and Franchising Regulatory Board (LTFRB) for an increase in their basic fare from R8 to R10, as well as for a “surge” fee of R1, similar to that charged by GRAB vehicles during the rush hours.

And the rise in prices and other costs may just only be beginning.

In response to the growing call for a suspension of the TRAIN’s new taxes, presidential spokesman Harry Roque said the government is ready to suspend the collection of the excise tax on fuel if the global price – now at $79.35 for Brent crude and $74.45 fo Dubai crude – reaches $80, as provided in the TRAIN law itself.

We find the Malacañang spokesman’s words reassuring, in the face of some other officials’ stand that the TRAIN must not be stopped as this will upset the entire government program for this and succeeding years, particularly its ambitious “Build, Build, Build.”

It is for the Filipino people as a whole that we push forward the country’s economic development. But in an unexpected twist of events, like the rise in world oil prices set off by the US-Iran clash, we must be ready to make the needed adjustments for the people, especially the poorer sector severely hit by the high prices.