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DTI told to probe price hikes triggered by CTRP

Prices of vegetables double brought about by monsoon rains in Northern Luzon which causes lack of supply in the Metro. Photo by NONIE REYES

The anticipated inflationary effect of the administration’s tax-reform program has already reared its ugly head even before the first tranche of the tax package is passed into law, as evidenced by the increases in the cost of basic commodities and vehicles.

With this, Rep. Dakila Carlo E. Cua the Lone District of Quirino, chairman of the Committee on Ways and Means, asked the Department of Trade and Industry (DTI) to intensify its market-monitoring activities to shield consumers from unscrupulous traders.

“I am receiving information that there’s already price increases, not only on basic commodities but also on the prices of vehicles. What is the basis for the price increase? Is it a new model? If it is a new model, definitely there is a basis; but if not and there’s no additional excise tax, why would they hike car prices? The DTI needs to look into this situation since it is within their mandate. That’s a big issue that needs to be investigated by the DTI and such unscrupulous practice must be curbed, as it will affect our consumers,” Cua said. Manufacturers and sellers of cars and basic goods, Cua said, cannot just increase the prices of their products.

“So what does this mean, are they already imposing [excise taxes]? Does the government receive remittance from this? There is still no enacted law on this matter. I am urging the DTI to closely monitor the prices of commodities, not just the basic ones, all commodities, because that’s their primary mandate, as well as to make sure that the prices of goods remain stable in the market,” he added.

According to Cua, he would file a resolution to conduct a congressional investigation on the reported price increases.

“I think we need to observe the possible issue of profiteering. What is profiteering? Profiteering involves people who are engaged in an opportunistic business by taking advantage of the situation to increase their profits at the expense of the market,” the lawmaker said.

The Senate is currently deliberating the first package of the Comprehensive Tax Reform Program (CTRP) of the Duterte administration.

The House-approved CTRP includes a P6 tax additional on petroleum products that could cause prices of basic goods to rise. The P6-per-liter excise-tax increase will come in three tranches of P3, P2 and P1, respectively, in three years starting 2018. It also provides new schedules and brackets for auto excise tax.  The Department of Finance (DOF) is pushing for the excise tax on vehicles to address the worsening traffic congestion in the country.

Under the proposal, the excise tax would be implemented in two schedules. For the lower bracket, if the net manufacturer’s price/importer’s selling price is P600,000, the excise tax would be 3 percent by 2018, then increase to 4 percent by 2019.

For the higher bracket, if the net manufacturer’s price/importer’s selling price is over P3.1 million, the excise tax would be P1,468,000 plus 90 percent of the value in excess of P3.1 million in 2018. For 2019, if the net manufacturer’s price/importer’s selling price is over P3.1 million, the excise would be P1,824,000 plus 120 percent of the value in excess of P3.1 million.

Anti-poor

The development gave Party-list Rep. Carlos Isagani Zarate of Bayan Muna, more reason to ask Congress not to allow “this anti-poor tax-reform bill to be passed”.

“The passage of this measure would greatly affect the purchasing power of lower-income groups and the poor, who buy noodles and canned sardines,” Zarate said. “While this tax-reform measure is giving more incentives to the rich, it is, on the other hand, burdening even more the ordinary consumers and the poor who will bear the brunt of the impact of the proposed new taxes.”

The lawmaker, citing the studies of IBON Foundation, said the  DOF bill will, in effect, take away P737 annually from the pockets of the poorest 2.3 million families with an average monthly household income of just P5,214 in 2018.

“P980 from the next poorest 2.3 million families with monthly income of P8,315; P1,163 from families with monthly income of P10,691; P1,374 from the next poorest families with monthly income of P13,015; P1,687 from the families with monthly income of P15,746;  and P2,088 from the families with monthly income of P19,269,” said Zarate, quoting the IBON Foundation.

He said the passage of the measure into law means that the poorest 60 million Filipinos will pay more taxes under the proposed tax package due to higher prices of food, drinks, LPG, transport fares, electricity, housing and other basic goods and services they consume.

“It will, in effect, take away P737 from every rice farmer; P980 from every
farmworker; P1,163 from every construction worker; P1,374 from every private-school teacher; P1,687 from every bookkeeper; and P2,088 from every machine tool operator,” he added.

The figures from a DOF table supposedly computing the change in annual take-home pay in 2018 are likely even underestimated, Zarate said.

For instance, he added, the DOF has also estimated that the oil-excise tax alone will increase a fisherman’s fuel expenses by P1,089, and of a farmer’s expenses by P1,210, with the VAT and inflationary impact even coming on top of these.

 

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