EDITORIAL - Predators

Prices of sugar – and not just sugar-sweetened drinks, which have been slapped with higher taxes – have gone up. Perhaps sugar millers and distributors have started factoring in the rising costs of electricity and transporting their products because of a hefty fuel excise tax, with value-added tax on top of it.

Energy and trade officials have issued numerous warnings and are making the rounds of gasoline stations and retail outlets in an effort to stop premature increases in consumer prices. Inventories must be exhausted first, the officials said, before prices are raised to reflect new or higher taxes under the Tax Reform for Acceleration and Inclusion or TRAIN Law.

The effort, however, is like trying to stop a tsunami from crashing ashore. Opponents of the excise tax and corresponding VAT on fuel – especially diesel, which is used by many public utility vehicles, and coal, which is still widely used in power generation – had precisely stressed the immediate inflationary impact of a major fuel price hike.

The implementation of TRAIN also means the start of cuts in income tax. As the income base just hovers around the daily minimum wage for millions of Filipinos, however, any savings in tax payments would be eaten up by increases in everything from transport fares, rent, utility bills, prices of food and other basic goods and services.

The problem is aggravated by predators who are taking advantage of TRAIN to raise the prices of their products even before they feel the impact of the higher taxes. Authorities must intensify their monitoring to apprehend these vultures and impose appropriate penalties.

The government says it needs TRAIN to finance its ambitious “Build Build Build” infrastructure program. Like any tax effort, however, achieving TRAIN targets will be easier with efficient implementation, and with millions in low-income households provided with safety nets and protected from predatory pricing.