MANILA, Philippines – With the implementation of the new tax reform law, or the Tax Reform for Acceleration and Inclusion (TRAIN) law, the public starts to experience the higher excise tax. The socioeconomic planning head of the country requested the administration last Tuesday to plan solutions to protect the poor against the impact of inflation.
Ernesto Pernia, socioeconomic planning secretary of the National Economic and Development Authority, stated that the administration must stay observant and make preparations to execute solutions that will reduce the upside risks to inflation.
Headline inflation, as computed on a rebased index, sped up to 3.9 percent in February, which is faster compared to the 3.4 percent in January, the highest to be recorded since August of 2014.
Under the previous base year, inflation rose to 4.5 percent in February from 4 percent in January, exceeding the government’s target of 2 to 4 percent. Despite that, it is still within BSP’s forecast of 4 to 4.8 percent for February.
Several analysts credited the inflation hike to the newly implemented TRAIN Act of President Duterte’s administration. The TRAIN law raised excise tax on various goods such as gasoline, sweetened drinks, as well as cigarettes.
According to Pernia, the TRAIN Act’s temporary impact and the ongoing decrease in value of the peso will primarily determine price activities in the approaching months. Thus, mitigating procedures must be ensured to be all set.
He also emphasized that apart from broadening the Pantawid Pamilyang Pilipino Program, which donates provisional cash fund, the administration also needs to change the quantitative limits on rice with tariff to cut staple food prices.
As per Pernia, such actions will guarantee better price stability of food items and will preserve or lift the purchasing power of households belonging to the bottom 30 percent.
The Department of Budget and Management has recently transferred 24.49 billion pesos to the Land Bank of the Philippines to be distributed to the 10 million poverty-stricken households of the country as aid in surviving inflationary conditions.
For the Department of Finance’s part, they said this 200 pesos per month of “unconditional cash transfers,” which amounts to 2,400 pesos this year, will be increased to 300 pesos per month in 2019 and 2020, which amounts to 3,600 pesos per year.
Meanwhile, Sen. Bam Aquino called on the administration for acceleration of the financial support rollout for the poor.
Sen. Aquino filed Senate Resolution No. 597, pressing the appropriate Senate committee to inspect the unconditional cash transfer implementation. This is to make sure the subsidy is enough to cover price increase of goods and other services.
According to him, they want to be certain that the monthly cash transfer of 200 pesos can shield the poor from the impact of increasing prices on commodities, as currently power and food costs are rising.
The current administration intends to reduce the country’s poverty incidence by 2022 to 14 percent and improve economic growth to 7 to 8 percent.