Further price spikes expected this year
Consumers must brace for higher prices this year as inflation in February hit 3.9% due to higher food and transport costs.
"I guess we have to bear with higher inflation rate this year," Cebuano economist Fernando Fajardo told The FREEMAN yesterday when sought for insights on the latest inflation data.
"In one part because of the Tax Reform for Acceleration and Inclusion (TRAIN) and in another part because of the continuing increase in prices of food products," the economics professor further explained.
Fajardo noted the recently passed tax law "affects a good number of products that are now subject to new or higher excise taxes."
Adding to the impact, he said, is also the removal of VAT (value-added tax) exemptions from of a number of products and services.
"Prices of food products are bound to rise because of our continuing rapid population growth and the inability of our agriculture to grow faster," the economist stressed.
The National Economic and Development Authority yesterday said measures to curb inflation and cushion its impact on the poor are urgently needed considering inflation last month reached the upper band of the government’s target.
The Philippine Statistics Authority attributed the inflation uptick in February to the faster increases in the prices of food and non-alcoholic beverages (4.8%), transport (5.8%), alcoholic beverages and tobacco (16.9%), furnishing, household equipment, and routine maintenance of the house (2.5%), restaurant and miscellaneous goods and services (2.5%), and clothing and footwear (2.0%).
While still within the 2-4 percent target of the government, Socioeconomic Planning Secretary Ernesto Pernia said that the government should remain vigilant and prepared to implement measures that will mitigate the upside risks to inflation.
“The transitory impact of the TRAIN Law and the continued depreciation of the Philippine peso will mainly influence price movements in the coming months, and we must ensure that mitigating measures should be in place,” Pernia said.
He said government must pay closer attention to the poor, citing there is a need to expand the Pantawid Pamilyang Pilipino Program (4Ps) and to fast track the distribution of unconditional cash transfer (UCT) from the TRAIN.
He also reiterated the call to replace the quantitative restrictions on rice with tariffs. This is expected to lower the price of rice and raise revenues for agricultural programs such as crop diversification and investment in disaster risk resiliency.
“These measures will ensure better stability in the prices of food items and maintain or raise the purchasing power of the bottom 30 percent of households,” he added.
Pernia also said the government, through the active lead of the Department of Trade and Industry, needs to strengthen the surveillance of businesses’ compliance with the country’s laws and regulations on fair consumer goods pricing to prevent the occurrence of profiteering.
“We must enforce fair consumer pricing among businesses: In January, there were anecdotal reports that some of them are taking advantage of the TRAIN Law by prematurely increasing their selling prices despite no additional input costs to their production and services brought about by the law,” Pernia said.
In an earlier statement, Pernia noted that based on the agency’s calculations, around 0.7 percent (at most) of inflation for 2018 will likely be attributable to the effect of TRAIN.
The Cebu Chamber of Commerce and Industry (CCCI) fosters its collaboration with government and private entities in fueling and sustaining Cebu’s economic growth and development.
CCCI, MCCI, AmCham Cebu Chapter host Tax Roadshow
Envisioned to help the business community, the chamber is committed to pursue the high cost and ease of doing business in Cebu in particular and in the region as whole.
CCCI, together with Mandaue Chamber of Commerce and Industry (MCCI) and American Chamber of Commerce of the Philippines, Inc. – Cebu Chapter (AmCham) will host the Tax Reform Roadshow: Understanding the TRAIN and Package 2 of the Comprehensive Tax Reform Program on March 9, Friday, from 9 am until 12 nn at Cebu Parklane Hotel, Cebu City.
The Tax Reform Roadshow is organized by the Philippine Chamber of Commerce and Industry (PCCI) together with its partner, the Department of Finance (DOF) and the USAID Facilitating Public Investments (FPI).
The TRAIN (Tax Reform for Acceleration and Inclusion) Act was enacted into law on December 2017.
It provides for the lowering of personal income taxes, simplifying the income tax brackets and lowering of the estate and donor’s tax. It also increased the excise tax on fuel, coal, automobile, sweetened sugar beverages, mining, cosmetic and tobacco. It also repealed 54 out of 61 special laws with non-essential VAT exemptions; and, increase in Documentary Stamp Tax, Foreign Current Deposit Unit, capital gains of non-traded stock and Stock Transaction Tax.
On the other hand, package 2 of the Comprehensive Tax Reform Program (CTRP) proposes the lowering of corporate income taxes and modernization of fiscal incentives following 4 principles: performance-based, targeted, time bound and transparent.
The event will be graced by Department of Finance Undersecretary Karl Kendrick T. Chua as the resource speaker.