Bam hits DOF: ‘Suspending TRAIN won’t affect funding for free tuition program, pay hike’

MANILA, Philippines — Halting implementation of the Tax Reform for Acceleration and Inclusion Act won’t affect funding for the government’s free tuition program and pay hike for uniformed personnel, Sen. Paolo Benigno "Bam" Aquino IV said Wednesday, as the Duterte administration defends the new tax law that critics call “anti-poor.”

The tax reform law—which lowers personal income taxes while raising excise levies on fuel and cigarettes, among others—has been blamed for the recent jump in prices of widely used goods and services, with some lawmakers saying that Congress might "suspend" the TRAIN law if inflation becomes unmanageable.

But the Department of Finance had warned that freezing the TRAIN law would derail the rollout of big-ticket infrastructure projects, and negatively affect the government’s ability to fund the free tuition program as well as the increase in salaries of the police and military.

In a tweet, Aquino, one of the authors of the Universal Access to Quality Tertiary Education Act, described the DOF’s remarks as “baseless.”

According to him, the government has an unobligated appropriation of P390 billion in the 2017 national budget.

“It’s wrong to say that these programs will not be funded because it’s clear that the government has funds,” the senator said. “Do not deprive the students of free tertiary education.”

Walang basehan ang pahayag ng DOF na maaapektuhan ang pondo para sa libreng kolehiyo at taas-suweldo ng mga sundalo at pulis kapag sinuspinde ang implementasyon ng TRAIN Act dahil mayroong unobligated appropriations ang pamahalaan na aabot sa P390 billion sa 2017 national budget. pic.twitter.com/yTUckmmXAj

— Bam Aquino (@bamaquino) May 16, 2018

President Rodrigo Duterte had thrown his weight behind the TRAIN law, which aims to help fund his administration’s ambitious infrastructure plan.

Last week, Aquino filed a bill seeking to temporarily prevent the TRAIN law from slapping higher excise duties on petroleum products if quarterly inflation rate overshoot the government’s target band.

Under the measure, the suspension can only be lifted if inflation cools down.

Using 2012 as base year, the overall surge in prices of key consumer items accelerated to a five-year high of 4.5 percent in April, putting the year-to-date tally to 4.1 percent or above the Bangko Sentral ng Pilipinas' 2-4 percent target range.

Citing government data, the DOF said the TRAIN law’s impact on consumer prices is limited to oil and “sin” products, although central bank Governor Nestor Espenilla said inflation might have “spread somewhat” to cover more goods.

The Bangko Sentral, which recently lifted policy rates to curb rising commodity prices, now expects inflation to remain elevated in the coming months and peak “towards the end of 2018,” citing a possible spike in world crude prices and second-round effects of the tax reform law.