By Jovee Marie N. dela Cruz, Butch Fernandez & Bernadette D. Nicolas
THE Palace and Congress have formed a consensus in support of at least five inflation-busting measures, including the reduction in tariffs on fish and meat imports, and officials are floating the option of having this done by an executive order (EO) when Congress takes a short scheduled recess from August 16 to 27.
This, as leaders of the House of Representatives on Sunday backed the five economic measures championed by Speaker Gloria Macapagal-Arroyo to cushion the country’s soaring inflation.
The former president, an economist, had sought a meeting with the economic managers last week—an encounter sources said she billed as “from one professor to another”—in a bid to find firmer ways of arresting the steady increase in inflation, which many critics had blamed on the first part of the Comprehensive Tax Reform Program, the TRAIN law.
TRAIN, which stands for Tax Reform for Acceleration and Inclusion, took effect in January 2018, and lawmakers are hard put championing the next-wave reforms on account of the continuing blame game over TRAIN as inflation continues to rise. Last week the Central Bank said inflation in July could reach 5.8 percent.
Earlier, House Committee on Economic Affairs Vice Chairman Joey S. Salceda of Albay said that in the meeting with the Economic Managers Group (EMG), Arroyo, together with key economic leaders of the House of Representatives, discussed measures to control inflation and bring immediate relief to ordinary working families and consumers.
He said the House under the leadership of Speaker Arroyo proposed to the EMG measures that were considered based on the magnitude of a commodity’s contribution to the July Inflation.
Salceda said Arroyo wants the President to consider reduce tariff on fish and meat imports to zero but needs Congress to be in recess. Under its Legislative calendar, Congress will take a break on August 16 to 27.
On Sunday Senate President Vicente C. Sotto III acknowledged the possibility of having tariffs for meat and fish imports reduced, through a Malacañang executive order, as an inflation-busting strategy while Congress is in recess.
“Yes, possible,” the Senate President told the BusinessMirror over the weekend in reply to a query on whether he was consulted on Arroyo’s proposal to cut tariffs on these products.
In fact, Sotto added, it is even possible that Malacañang might consider resorting to an Executive Order to hasten shift to a rice tariffication system “while Congress is in recess.”
The long-awaited transition to rice tariffs, from the current quantitative restrictions (QR), is widely seen to help cut inflation which was higher than expected, and which has been blamed on the TRAIN Law.
Congress members had been badgering economic managers to find ways to cut inflation because, they said, it will be hard for them to push the second package of tax reforms (TRAIN 2) for as long as people associate high prices with the so-called TRAIN 1.
Support from House leaders
Arroyo’s pitch of five inflation-busting measures to President Duterte, through his economic manager, got full support on Sunday from key committee leaders: Economic Affairs Chairman Arthur Yap of Bohol, Appropriations Chairman Karlo Alexei B. Nograles of Davao City, Ways and Means member Rodel Batocabe of Ako Bicol and Banks and Financial Intermediaries Chairman Ben Evardone of Eastern Samar.
“I guess she is just imparting lessons from her experience when during her presidency, she had to insulate the country from the effects of global food price spikes and the meltdown of the global financial markets due to the sub prime mortgage crisis,” said Yap, a former agriculture secretary during the Arroyo administration.
“From 2008 to 2010 she primed the economy with infrastructure expenditures, instituted conditional cash transfers for the vulnerable sectors and ensured food inflation was in check,” he added.
EO? It’s Executive’s call
However, when asked if Arroyo will recommend to the President to issue an executive order to implement these measures, Yap said, “I think the Speaker just shared her ideas, but of course, it’s the economic managers who must decide what is feasible or not under the circumstances.”
Not sure-fire inflation buster
Not everyone in the House agrees with the strategies on the table, however.
Akbayan Rep. Tom S. Villarin said reducing tariffs on imports of oil, electricity and food commodities would not cushion the impact of inflation as external factors like US federal interest rate hikes, rising global oil prices, and decreasing exports would offset such measures.
“It will provide a buffer stock of goods for consumers but unstable government policies and jittery financial markets have also caused inflation not to taper down,” Villarin added.
According to Yap, however, Arroyo is only drawing lessons from “that episode of her life” when she was president.
“And the results bore her out. The Philippine economy continued to grow and expand in the last 10 quarters of her Administration,” he said.
Other ‘inflation busters’
Salceda, meanwhile, said Arroyo also wants the National Food Authority to purchase 500,000 MT of well-milled rice with staggered deliveries over five to six months.
Arroyo also proposed to the Department of Energy to consider deferring z-ethane required additional content in oil products as well as the new feed-in-tariff allowance which increased from P0.18 to P0.26/kwh as this alone contributed to a P3.16/kwh increase in Meralco rates, Salceda said.
The lawmaker said the Bangko Sentral ng Pilipinas was also asked to study an additional 25 basis points (bps) rate hike after the two 25 bps already implemented, in order to cleanse the market of any potential speculative opportunistic content.
For his part, Nograles said Arroyo and Duterte’s economic managers “see the wisdom” in giving this strategy a chance to work.
“These things have been done before and they’ve worked in the past,” Nograles said.
“Rice, fish and meat obviously form part of the basic food basket of our countrymen. If we can bring the prices down, that would temper inflation and the lower prices will be felt immediately and will be greatly appreciated by the public,” Nograles added.
Also, he said finding a way to bring down the prices of oil and electricity will further slow down inflation and control the prices of commodities in the market, as well.
Batocabe and Evardone, meanwhile, said they will support Arroyo as she is an economist.
“The Speaker is an economic expert and I will defer to her good judgment. As such, she can be assured of my full support on these economic measures,” Batocabe said.
For his part, Evardone said “I support it to give consumers a respite from the spiraling upward of cost of basic commodities.”
Malacañang: All ears on measures
Malacañang confirmed on Sunday that one of the proposed measures proposed by Arroyo to combat inflation is to lower tariffs on fish and meat imports as the President has always wanted affordable food for Filipinos.
“Ever since, President Rodrigo Roa Duterte wishes for food to be bought at an affordable price,” Presidential Spokesman Harry L. Roque, Jr. said in Filipino in a statement. “To cushion the impact of rising prices, pushing for lower tariffs on meat and fish imports is one of the proposed measures discussed during the recent meeting between President Duterte’s economic managers and Speaker Gloria Macapagal-Arroyo.”
“The economic managers are happy to be continuing to be working closely with the leadership of the legislature,” Roque said.
June inflation went beyond government expectations and hit a new five-year high at 5.2 percent, bringing the year-to-date average from January to June this year at 4.3 percent, slightly higher than the government’s target at 2 to 4 percent. July inflation is expected by the Bangko Sentral ng Pilipinas fall within the range of 5.1 to 5.8 percent. The inflation figure is expected to be released on Tuesday.
TRAIN 2’s fate
In a related development, Senate President Sotto said he was leaving it up to the chairman of the Ways and Means committee, Sen. Juan Edgardo Angara, to make the TRAIN2 bill a priority. Unlike TRAIN that imposed new taxes, this next round of reforms involves cutting the corporate income tax and rationalizing fiscal incentives.
Asked by the BusinessMirror if the committee is frontloading the TRAIN 2 bill in its priority list, Angara indicated it will be taken up along with other pending revenue-raising measures being lined up for plenary consideration.
“We can start tackling other bills after the tax amnesty bill,” said Angara, adding he is hoping to sponsor the tax amnesty bill for plenary deliberations “within the next two weeks.”