Duterte defends implementation of tax reform program

President Rodrigo Duterte on Wednesday defended his tax reform program that some groups blame for the rising cost of fuel and other commodities.

Duterte recognized the impact of the Tax Reform for Acceleration and Inclusion (TRAIN) law on inflation, which spiked to a five-year high of 4.5 percent in April, but said he needs money to fund government services.

“Inflation is always there. There are many reasons, but actually, one of them is TRAIN. But I need money also to run the country. If you do not give it, fine,” Duterte said in his speech during the change of command ceremony of the Presidential Security Group in Malacañang.

The rising prices of petroleum products has prompted calls for the suspension of the TRAIN law, which imposed an excise tax of P2.50 per liter on diesel and raised the levy on gasoline to P7 from P4.35 per liter.

The Palace has already left to Congress to decide on the matter even as it warned of the proposal’s negative impact on the government’s infrastructure program and other initiatives.

The Department of Finance (DOF) rejected the proposal, saying suspending the reformed excise tax rates on petroleum products for 2018 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 (MOPS) for three months preceding the scheduled increase reaches or exceeds $80 per barrel,” said Finance Undersecretary Karl Kendrick Chua on Monday.

Should the price of Dubai crude keep going up and the three-month average in the last quarter of this year hits $80 per barrel, it will be ready to activate the suspension mechanism for the next increase in January 2019, according to the Finance department.

The DOF also said the law’s impact on inflation last month was only at 0.4 percent, pointing instead to other drivers such as volatile global oil prices and peso depreciation.

Budget Secretary Benjamin Diokno added Filipinos should not be too complaining as revenue collected from reformed excise tax rates will be used for government services.

Economic managers expect that the first package of the TRAIN law will generate around P90 billion in additional revenues this year, part of which will fund the government's infrastructure projects as well as social mitigating measures to offset the impact of the anticipated increase in commodity prices.

The TRAIN law provides income tax cuts for the majority of Filipino taxpayers while raising additional funds through higher excise taxes on fuel, cars, and sweetened beverages to help support the government’s accelerated spending on infrastructure and social services programs. —KG, GMA News