TRAIN law has minimal impact on prices of goods — DTI

Published January 5, 2018, 11:40 AM

by AJ Siytangco

By the Philippine News Agency

Trade and Industry Secretary Ramon Lopez dismissed fears of consumers regarding the impact of the Tax Reform for Acceleration and Inclusion (TRAIN) Act on the prices of basic goods.

Lopez said in a press conference Thursday that the new tax law imposing excise tax on petroleum products has minimal effect on the prices of basic commodities.

Department of Trade and Industry Secretary Ramon Lopez (ALBERT ALCAIN/PPD / MANILA BULLETIN)
Department of Trade and Industry Secretary Ramon Lopez

He said that, based on the computation of economists and even the Department of Trade and Industry (DTI), the excise tax on fuel will hike prices of goods by less than one percent.

From DTI’s computation, the new law only translates to a 0.4 percent increase in prices of goods.

He explained that the excise tax will only increase transportation cost by about 7 to 8 percent.

The transportation cost, on the other hand, shares less than 5 percent of the production cost.

Below is DTI’s computation on the impact of excise tax on prices of basic goods:

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Moreover, Lopez said the department will still not require the pre-approval of suggested retail prices (SRPs) as it is confident with the competition in the market.

With this, a brand of canned sardines may increase its SRP by P1.00, at its own risk of losing market share since consumers may opt to other brands of canned sardines which did not hike their SRPs, the DTI chief cited.

However, if all the players of a particular product increased their prices above the “justifiable” price, which is based on the DTI’s computation of below one percent, the department will initiate investigation as collusion may be happening in the sector.

Lopez said as the government is still working on the implementing rules and regulations of the TRAIN Act, new taxes under the new law were imposed starting last Monday.

Those profiteering will be penalized under the Republic Act 7581 or the Price Act, Lopez said.