MANILA, Philippines — Amid the concern over rising prices attributed to the first package of the government’s tax reform program, senators are considering measures to mitigate the impact on Filipinos, including a suspension of the additional excise tax on petroleum products.
Sen. Paolo Benigno "Bam" Aquino IV said on Wednesday that he would be filing a bill that would allow the government to suspend excise taxes on oil and petroleum products if the government's inflation target had been breached.
“We need a mechanism that can help us suspend this. We should put a halt to it. Let’s not allow prices of goods and services to increase further,” Aquino said in Filipino in an interview.
“I hope I will get the support here in the Senate to push for this measure to give our government flexibility to suspend excise taxes if the prices of goods and services increase too much,” he added.
READ: BSP sees manageable inflation for 2018 to 2019
Aquino also lamented the government's failure to implement its cash transfer program to help the poor deal with the impact of the tax reform measure.
He said that based on the estimate of the Department of Social Welfare and Development the government’s optimistic target for the full implementation of the financial aid is September or by the end of 2018.
Sen. Sherwin Gatchalian meanwhile is eying an increase in the government’s cash transfer program, from the current P200 a month to around P450 a month to enable poor Filipinos to better cope with the increase in prices especially of food.
He however said that another quarter is needed to fully assess if there is a need to suspend the implementation of some aspects of the tax reform law, or the Tax Reform for Acceleration and Inclusion Law, which kicked into effect on Jan. 1, 2018.
“In my assessment, we need one more quarter to determine if we need to suspend the excise tax or not. We are only in the second quarter to get an accurate reading. There should be another quarter,” he said.
Gatchalian said that additional petrol taxes set to be collected next year could further push inflation upward, adding that they are closely monitoring this round of additional levies.
Inflation in April accelerated to 4.5 percent, the fastest in five years. This also pushed the year-to-date inflation rate to 4.1 percent, above the two to four percent target range of the Banko Sentral ng Pilipinas (Central Bank of the Philippines).
The International Monetary Fund said that it expects the country’s inflation to be at 4.2 percent for 2018, above the target of the BSP. This is expected to ease to 3.8 percent next year.
The TRAIN law, whose first package lowered income taxes while imposing higher levies on fuel and cigarettes, is seen as a major contributing factor to the rising inflation.
During its deliberations, the TRAIN law was emphasized as an important revenue-generating measure to help fund the government’s ambitious infrastructure program.
Aquino, who voted against the law, said that he had put in place safeguards in the Senate’s version of the TRAIN law to empower the government to suspend its implementation in case of runaway inflation.
However, these safeguards were struck out during the deliberations of the Bicameral Conference Committee to reconcile the measures from the Senate and the House of Representatives.
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