Keep a close watch on rising consumer prices

Published June 2, 2018, 12:05 AM

by Francine Ciasico



Consumer prices have been steadily rising these last few days, from a combination of surging global oil prices and the excise tax on diesel and other fuel imposed by the Tax Reform for Acceleration and Inclusion (TRAIN) law.

The country’s oil firms have hit the motoring public with three successive price increases in just 14 days starting last May 15. At the end of the two-week period, gasoline was costlier by P3.35 per liter, diesel by P2.70, and kerosene by P2.40.

The first to complain were jeepney drivers and operators who asked the Land Transportation and Franchising Regulatory Board (LTFRB) for an increase in their basic fare charge from P8 to P10, plus a “surge” fee of P1 during rush hours, like that allowed GRAB vehicles. The Department of Energy (DOE) asked the oil companies to give public transports a second round of price discounts on top of the P1 per liter they granted last March 1.

As for the move to suspend the TRAIN law’s imposition of an excise tax on fuel, this is not likely, as this would upset the entire tax collection program of the government and, therefore, its budgeting for “Build, Build, Build” and other economic plans of the government. The TRAIN law has a provision that the new fuel tax will be suspended if the global fuel price reaches $80 per barrel in Dubai and that point has not been reached.

Last May 18, three days after the first price increase by local fuel companies, the Department of Finance (DOF) took note of the beginning inflation, but said it expects the rise to be “temporary” and “manageable” because of the robust Philippine economy.

In due time, it said, the disposable income of most taxpayers will rise as a result of TRAIN’s reduction of income tax rates. There is also TRAIN 2, already in the House of Representatives, which calls for a reduction of the present 30 percent corporate income tax – by 1 percentage point a year starting in 2019, provided the rate does not drop below 20 percent. This should result in more and better jobs, faster innovation, and countryside development, the DOF said.

But all this is well into the future. Our immediate concern is the rise in prices of consumer goods. It is good to look forward and see the national economy as benefitting from the TRAIN laws, but the immediate problem of prices needs urgent government attention and action as these rising prices are hurting the poorest sector of the population the most.

At one time, the national government set up so-called Kadiwa Centers or Rolling Stores of the National Food Authority providing the most basic commodities . If the present price situation worsens, the government might want to revive this project for the poor from the past.