The tax reform law—which lowers personal income taxes while raising excise levies on fuel, sugary drinks and cigarettes, among others—has been partly blamed for the soaring prices of key consumer items in the recent months.
But despite having a tax-freeze provision that will kick in when global oil prices hit a certain threshold, some legislators say Congress might “suspend” the TRAIN law if inflation remains elevated.
In an interview with Cignal TV’s One News, House Ways and Means committee chairman Rep. Dakila Carlo Cua (Quirino) said Congress may put more safeguards in the TRAIN law to shield the poor from the pinch of inflation.
“We can also legislate further enhancements if the safeguards are not enough. We could grant the president the power to suspend other features [of the TRAIN law]. If those measures are much-needed, why not?” Cua said.
“That’s the option we’re thinking of… I’m open to pushing for that authorization so it can be studied and targeted,” he added.
Using 2012 as base year, the overall surge in prices of widely used goods and services 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.
The central bank, which recently lifted policy rates to rein in inflation, now expects inflation to keep its ascent in the coming months and peak “towards the end of 2018,” citing a possible jump in world crude prices and second-round effects of the tax reform law.
Earlier this month, Brent crude, used to price international oil, rose 77 cents to $80.05 per barrel in London, its highest level since November 2014 amid geopolitical and global economic concerns.
But crude prices closed lower last week after Saudi Arabia and Russia were reported to be considering an increase in production ahead of a key Organization of Petroleum Exporting Countries meeting in Vienna next month.
In a statement on Monday, the Department of Finance said it has no plans to immediately halt the increased rates of excise taxes on petroleum products for 2018 as “this is not the mechanism sanctioned by law.”
“The suspension measure only takes effect when the average Dubai crude oil price based on Mean of Platts Singapore for three months preceding the scheduled increase reaches or exceeds $80 per barrel,” the DOF said.
“Should the price of Dubai crude keep going up and the three-month average in the last quarter of this year hits 80 dollars per barrel, we will be ready to activate the suspension mechanism for the next increase in January 2019,” it added.
text IAN NICOLAS CIGARAL with reports from BUSINESSWORLD & THE ASSOCIATED PRESS
This article was originally published on PHILSTAR.