Senate bets want to junk TRAIN law, fuel taxes to cool inflation
Members of a militant group protest against the Tax reform for acceleration and inclusion (TRAIN) law on higher fuel excise tax at Mendiola in Manila, Jan. 15, 2019.
The STAR/KJ Rosales
Senate bets want to junk TRAIN law, fuel taxes to cool inflation
( - February 25, 2019 - 1:10pm

MANILA, Philippines — Senate hopefuls on Sunday pinned the blame on the Duterte administration’s tax reform law for the multi-year high inflation that the country experienced last year, adding that they want the law scrapped to bring down the prices of goods.

Higher excise taxes on certain commodities, food supply bottlenecks and rising fuel prices pushed up inflation last year, and it spiked to a near-decade high in September and October before it started to cool down.

Under the Tax Reform for Acceleration and Inclusion Act, or TRAIN law, personal income tax rates are adjusted to remove the burden off lower-income segments while raising levies for fuel, cars, tobacco, coal, minerals and documentary stamps, among others.

The TRAIN law also removed some exemptions to value-added tax and slapped new taxes for sugar-sweetened drinks and cosmetic procedures. The law took effect in January last year.

During ABS-CBN's "Harapan 2019" senatorial town hall debates, candidates said the TRAIN law lifted prices in 2018.

“I believe this is an effect of TRAIN law, particularly from the imposition of taxes on petroleum products. That’s why I propose that this must be suspended,” Rep. Gary Alejano (Magdalo party-list) said in Filipino.

Former Pagsanjan, Laguna Mayor Abner Afuang also believed the TRAIN law is the key culprit for inflation, adding that the law is a “plague” and must be “derailed like a train.”

Rep. Neri Colmenares (Bayan Muna party-list) said there must be a law that would repeal the higher excise taxes imposed by the TRAIN Act and will remove the VAT on power, water and fuel.

Meanwhile, election lawyer Romulo Macalintal warned voters against choosing re-electionist senators who pushed for the passage of TRAIN law. Human rights lawyer Erin Tañada, for his part, also called for the suspension of a fuel tax hike.

While he also blamed the TRAIN law for soaring prices, former Interior Secretary Mar Roxas stressed the importance of helping local farmers to feed more Filipinos.

Former federalism Consultative Committee spokesperson Ding Generoso likewise called for the removal of fuel taxes but added that the government should also improve local production of goods and services to push up supply.  

Aside from revamping the country’s tax system, the TRAIN law also aims to partly fund the Duterte administration’s “Dutertenomics” economic agenda, which is anchored on stronger law enforcement and massive infrastructure spending, as captured by the slogan, “Build, Build, Build.”

Gold reserves

Also asked about her plan to help lower prices, independent candidate Agnes Escudero said the country’s gold reserves should stay at a healthy level so they can be used to develop the country.

“Naniniwala ako na itong mga taxation na ito ay parte ng what I call floating economy, but the true economy of our country is on the gold reserve because it is where we print money. Kung healthy ang ating gold reserve, maganda din ang flow ng ating economy. Makaka-build ng maraming infrastructure, employment ang ating bansa,” Escudero said.

“Pero kung ang mga gold reserves na ito ay hindi ginagamait sa tama, apektado po tayong mga mamamayan sapagkat sa atin ipapataw ang mga tax na ito. Kung ganon man ang mangyayari nasa gobyerno pa rin kung tatanggalin nila o hindi ang mga tax na ito.pabor po ako na tanggalin ang tax,” she added.

“Hindi po dapat ipinapataw sa atin ang mga korupsyon na ginagawa nila sa ating gobyerno.”

Gold is part of the country’s international reserves. Being the lender of last resort, the Bangko Sentral ng Pilipinas holds international reserves for the foreign exchange requirements of the country in case the supply from domestic commercial banks falls short of the total demand.

As the term connotes, the international reserves serve as a stand-by fund to help the economy stay afloat during an exchange crisis or in time of national emergency. — Ian Nicolas Cigaral

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