New taxes merit re­view in face of ris­ing prices

Manila Bulletin - - Editorial -

PRICES have been ris­ing since Jan­uary this year. The De­part­ment of Fi­nance said the in­fla­tion rate has now hit a three-year high of 4.5 per­cent, when the tar­get range of the Bangko Sen­tral ng Pilip­inas was only 2 to 4 per­cent.

Be­cause the price – or in­fla­tion rate – in­creases be­gan in Jan­uary, they have been blamed by some on the gov­ern­ment’s Tax Re­form for Ac­cel­er­a­tion and In­clu­sion (TRAIN) Law which took ef­fect in Jan­uary. Of­fi­cials, how­ever, claim that the TRAIN Law ac­counted for only a mi­nor part of the price in­creases. Of the 4.5 per­cent in­crease, they said, only .2 per­cent is due to the higher sin taxes on cig­a­rettes and liquor, and .4 per­cent to the higher taxes on fuel. Most of the 4.5 in­fla­tion in­crease, they said, is due to mar­ket forces, in­clud­ing world­wide oil price in­creases and de­pre­ci­a­tion of the Philip­pine peso.

Long be­fore the TRAIN Law was en­acted, we had ex­pressed fears that the tax in­creases on diesel and other fuel were bound to boost the prices of con­sumer goods of all kinds. Diesel fu­els cargo trucks which bring farm prod­ucts to city and town mar­kets. Diesel also fu­els pas­sen­ger buses which are bound to raise pas­sen­ger fares.

The TRAIN Law en­acted last year is only the first sched­uled by the ad­min­is­tra­tion. TRAIN 2 is now be­ing read­ied for fil­ing in Congress and it in­cludes fur­ther in­creases in the prices of sin prod­ucts like liquor and cig­a­rettes, ac­cord­ing to Fi­nance Sec­re­tary Car­los Dominguez III.

There is fur­ther bad news from the oil com­pa­nies which im­posed last Tues­day hefty in­creases on diesel, gaso­line, and kerosene, as world prices rose on fears of po­ten­tial dis­rup­tion of oil flows from Iran. The United States had an­nounced last week that it would im­pose new sanc­tions on Iran af­ter re­ject­ing a 2015 agree­ment that had curbed Iran’s nu­clear de­vel­op­ment ac­tiv­i­ties.

In the face of these de­vel­op­ments, the gov­ern­ment should take a sec­ond look at the TRAIN Law. It is sup­posed to ben­e­fit or­di­nary tax­pay­ers through lower tax rates, but mil­lions of un­em­ployed Filipinos will be suf­fer­ing from con­sumer price in­creases re­sult­ing from higher diesel taxes.

There are fur­ther pack­ages of the Com­pre­hen­sive Tax Re­form Pro­gram set to be en­acted into law un­der TRAIN 2 and suc­ceed­ing bills. They will surely boost the coun­try’s fis­cal po­si­tion as pro­jected in the Gross Do­mes­tic Prod­uct which is ex­pected to ex­pand by 7 per­cent. But these too merit a close sec­ond look in the wake of the un­ex­pected 4.5 per­cent rise in in­fla­tion now be­ing felt by the con­sum­ing pub­lic.

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