Train Law not cause of most commodity price increases: Dominguez

March 9, 2018

DAVAO CITY – Finance Secretary Carlos Dominquez III on Friday took exceptions to allegations that price increases early this year were triggered by the implementation of the Tax Reform for Acceleration for Inclusion (Train) Law.

“The most part of the increases in commodity prices in the early part of the year, in January, were not due to the Train Law,” Dominguez said in a news briefing shortly before the Philippine Economic Briefing at the SMX Convention here on Friday.

He said two global trends and one local improvement in law enforcement jolted the prices higher.

Dominguez said these are oil price hike in the world market, running from $55 to $65 a barrel; increase in US interest rates, which went up in December and affected the peso, and the continuing implementation of a 2015 law that stipulates periodic increase in tax on liquor and cigarettes.

The oil price hike and increase in US interest rates  “have effects in the prices of local goods”, he said.

“We know that there is an inflationary effect in the implementation of the Train Law. We never hid that. In fact, we estimated the inflation to go up by 0.7 of one percent at the end of the year. We have experienced that,” he said.

Dominguez warned however, that the Train Law would affect sugary drinks, at P6 per liter for sugar and P12 for the use of corn syrup.  “Expect (prices of ) your softdrinks to go up,” he said.

Also, expect the price of alcohol to go up “not because of the Train Law, “but that is already contained in a 2015 law”.

The good thing for the economy, he said, was  government would be collecting more from the cigarettes and liquor “because people are now paying proper tax”. He said government “caught one of the big companies, collected P13 billion and forced it out of business”.

The company that took over the operation of the former owner “is now paying properly the taxes”.

With the new company’s proper paying of taxes would be expected to be reflected in the price of cigarettes, which would be expected to go up higher by another P2 per pack.

“Why is this so? Because we want to make sure consumption of these unhealthy products would be reduced,” he said.

He said government has reduced tax rates and exemption for workers earning P200,000 to P250,000 a year to mitigate the effect of the Train Law on this sector.

This month, he added, the Department of Social Welfare and Development has began distributing cash assistance worth P2,400 a year for an estimated 10 million poorest Filipinos.

The Department of Budget and Management posted in its email to reporters that “a total of P24.5 billion cash allocation has been fully released to the Land Bank of the Philippines in line with the Tax Reform Cash Transfer Project (TRCT) of the DSWD”.

“This is the biggest tax reform mitigation program under the Tax Reform for Acceleration and Inclusion Train Law,” it said.

The DBM said P4.3 billion of the amount released on March 5 would be used “to fund cash grants at P200 per beneficiary per month to the existing 1,805,801 Pantawid Pamilyang Pilipino Program (4Ps) Cash Card beneficiaries.

The remaining P19.94 billion was released on Friday. “This would benefit another 8,194,199 beneficiaries under the 4Ps, Social Pension, and National Housing Targeting System for Poverty Reduction (NHTS-PR) or Listahan programs,” the DBM said.

The release of the funds would entitle 4Ps and social pension beneficiaries to receive their cash grants within the month, the DBM assured. “Notably, the entire annual TRCT cash grant shall be provided one-time per year to the intended beneficiaries”, it added. DMS

It clarified that the TRCT “seeks to provide cash grants to poor households and individuals who may not benefit from the lower income tax rates but may be adversely affected by rising prices”.

“This mitigation measure will grant cash transfer support to the bottom 50 percent of households (or approximately 10 million households) identified by the DSWD based on the list of beneficiaries registered in the NHTS-PR or Listahan. The subsidy is intended to mitigate the temporary increases in prices owing to the implementation of the comprehensive tax reform program,” it said.

The DBM said on the first year of the TRCT, “funds in the amount of P24.49 billion have already been lodged to the LBP, in accordance with the FY 2018 General Appropriations Act”.

“The LBP shall use such funds for the TRCT in accordance with the Operational Guidelines issued by the DSWD. Upon completion of the list of TRCT beneficiaries, the Unconditional Cash Transfer National Program Management Office (UCT-NPMO) shall transmit the same to the LBP,” it added. DMS