Solons: Move fast to stop ‘runaway’ TRAIN

By Jovee Marie de la Cruz

AS inflation hit a five-year high at 5.2 percent in June, certain lawmakers said the Duterte administration now appears to be losing control of the country’s economic fundamentals as a result of underestimating the impact of the Tax Reform for Acceleration and Inclusion (TRAIN) law and how external factors could aggravate this.

However, the chairman of the House Committee on Economic Affairs said Congress should do its part to help mitigate the impact of the first package under the comprehensive tax-reform law by  passing measures, such as the proposed Rice Tariffication Act and increasing the conditional cash transfer (CCT).

Given the continuous price hikes, Magdalo Rep. Gary C. Alejano underscored the urgency of reviewing the TRAIN law, which took effect on January 1.

Currently, several bills and resolutions are pending in Congress for the review or repeal of the TRAIN law.

“The economic managers of Duterte predicted everything will slow down last June, but the inflation still rose to a five-year high of 5.2 percent in June from 4.6 percent the month before. It is either they have lost the economic acumen or they are in perpetual denial of the havoc brought by TRAIN,” Alejano asserted.

The Philippine Statistics Authority (PSA) said the last time the inflation rate was at 5.2 percent
was in October 2011.

“I am urging my colleagues in Congress to act on measures reviewing the impact of the TRAIN law, particularly on the poor,”
Alejano said.

Alejano also chided the government for continuously saying that everything is still under control and will normalize in succeeding months. “The only way to restore control is to roll out quick mitigating measures like suspending the TRAIN or implementing social- protection programs that are still up in the clouds,” he said.

‘Could be more severe’

For his part, Albay Rep. Edcel C. Lagman said while the 5.2-percent inflation rate in June is alarming enough, it is still an understatement of the severity of the Philippine inflation.

Lagman, citing PSA, said of the consumer goods and services included in the consumer measure, the most essential items of food and nonalcoholic beverages registered an even higher inflation rate of 6.1 percent.

In Lagman’s view, the TRAIN “cannot be blameless for the current inflation problem because its imposition of higher excise taxes on petroleum products, among others, has cascaded into the shallow pockets of ordinary Filipinos who are now confronted with higher costs of fuel, transport, electricity and commodities and services due to increased production cost.”

“Duterte’s economic managers must not refuse to study a rigorous quantification of the effects of the TRAIN law, rather than nonchalantly pointing to other factors like global oil prices and peso depreciation, including the purported buying propensity of Filipinos, as culprits,” Lagman added.

The Bangko Sental ng Pilipinas’s (BSP) plan to again increase interest rates may constrict investments and subsequently depress employment, even as consumers will have to earn more to buy the same quantity of goods and services, he said.

Earlier, House Committee on Ways and Means Chairman Dakila Carlo E. Cua of Quirino said the government is set to roll out the Pantawid Pasada Program that will provide public-utility jeepney franchise holders with discounts in their purchase of fuel this month.

Pantawid Pasada is a mitigating measure under the new tax-reform law to ease the impact of oil excise- tax increases on commuters and the land-transport sector.

Besides the Pantawid Pasada, the TRAIN also provides for additional unconditional cash transfers to low-income earners amounting to P2,400 for 2018; and P3,600 for 2019 and 2020.  The cash grants
are already being implemented by the DSWD.

Republic Act (RA) 10963, or TRAIN law, also provides public-utility vechicle fare discount of 10 percent, discounted National Food Authoirty (NFA) rice purchases of up to 20 kilos per month, and free skills training by the Technical Education and Skills Development Authority.

Solutions

Meanwhile, House Committee on Economic Affairs Chairman Arthur C. Yap of Bohol said Congress should now enact measures addressing the impact of the TRAIN law.

Yap, a former agriculture secretary, wants Congress to pass the Rice Tariffication Act and the measures increasing the CCT.

“Our people need the breathing spell to contend with the high prices of rice brought about by the lack of NFA buffer stocks and the weak peso. The NFA needs the assistance of the private sector through private importations to stabilize rice prices. Anyway, we have entered the lean months, and there are no more domestic harvests to protect,” he added.

“Cash transfers must also be increased to vulnerable sectors, and if releases will be conditional, then they must be conditioned on skills training for beneficiaries in the manufacturing and construction sectors, which are fundamentally expanding,” Yap said.

Anac-IP Rep. Jose T. Panganiban Jr.,  chairman of the House Committee on Food and Agriculture, said members of his committee will sponsor the measure amending RA 8178, or the Agricultural Tariffication Act when session resumes this month.  Amending RA 8178 is needed to scrap the quantitative restriction and convert it into tariffs.  On the CCT, there are bills filed in the Senate and House of Representatives increasing
conditional grants.

Increase rates–Yap

Besides the passage of needed measures, Yap said the BSP must also act now decisively, off cycle, to increase rates to stabilize the situation.

“The increase in rates will mop up the market’s excess liquidity that may possibly rein in runaway prices and stave off further weakening of the peso,” he added.

Also, Yap said the “Build, Build, Build” program must continue focused and unabated to balance possible impacts to growth should the private sector delay their investments due to the BSP rate hikes.

SOURCE: https://businessmirror.com.ph/solons-move-fast-to-stop-runaway-train/