DOF exec: Profiteering, not TRAIN, a factor for uptick in inflation

Several factors have pushed commodity prices up in January including profiteering made by some businesses after the Tax Reform Acceleration and Inclusion (TRAIN) Law took effect that month, an official of the Department of Finance (DOF) said Thursday.

Inflation zoomed to 3.95 percent in January, the fastest in over three years, but still within the central bank's full-year target of 2 to 4 percent.

At a press briefing in Malacañang, Finance Undersecretary Karl Kendrick Chua said that based on calculations of government economists, only 0.7 percent of inflation for 2018 is attributable to the effects of TRAIN.

"Now, actually, what we think is the real driver of higher inflation aside from possible profiteering is that the tobacco industry is now paying the right taxes," Chua said.

"Tobacco inflation actually in January was 17.4 percent when we expect it only to increase by 8 percent. And this is likely to be due to one company [Mighty Corp. under Japan Tobacco] which is now paying the right taxes after being caught smuggling and producing illicit cigarette. In fact, that company, under the new management, is now paying almost two billion more per month," the DOF official said.

Fish inflation was higher at 12 percent but Chua said this likely reflects the close-season of fishing (November to February) and recent typhoon in the Visayas.

Products directly affected by the excise tax did not see much higher prices.

"Sugar sweetened beverage, mababa rin iyong inflation: 2.8 percent. Alcohol, we expect it to rise four percent kasi iyong SIN Tax every year ay may four percent adjustment, pero mababa rin siya," Chua said.

Chua assured concerned government agencies are doing their job in going after businesses taking advantage of the implementation of the law by raising prices of their goods prematurely.

"Ang ginagawa natin since the first day of TRAIN is DTI [Department of Trade and Industry] and DOE [Department of Energy] have been going around monitoring prices and some of them were captured well in the media," he said.

"Iyong mga nahuling mas mataas sa SRP [suggested retail price] pinagsabihan at marami namang nag-roll back ng price and besides there are many other factors that we should consider. So we just have to be vigilant, continue our work in monitoring and for the public to inform the government kung mayroon pong nagsasamantala ng price," Chua added.

The government has repeatedly touted the benefits of the TRAIN Law, which provides income tax cuts for the majority of Filipino taxpayers while raising additional funds to help support the government’s accelerated spending on its ?infrastructure and social services programs.

The DOF had said 99 percent of the country’s population will benefit from the TRAIN, with salaried employees and self-employed individuals earning a taxable income of P250,000 per year, or around P21,000 a month, exempted from paying the personal income tax (PIT).

Chua added the government began last month the distribution of P200 monthly subsidy for over 10 million poor households to offset the increase in prices due to the higher excise taxes imposed by TRAIN. — RSJ, GMA News