SENATORS are still committed to back the Duterte administration’s second round of measures under the Tax Reform for Acceleration and Inclusion (TRAIN), but signaled they are skeptical of any assurance that impact assessments presented to them can be relied on this time.
Responding to a query from the BusinessMirror over the weekend, senators conveyed their intent to seek firm assurances from Executive endorsers of TRAIN 2 about the validity of their assumptions. Lawmakers want to avoid a repeat of the TRAIN’s blindsiding the nation after economic managers underestimated the extent by which “external factors,” such as global oil-price hikes and rice-supply issues, could compound the inflationary impact of the tax-reform law.
The senators agreed this miscalculation compounded the inflation impact of the TRAIN, which took effect on January 1, 2018, and included higher excise taxes on fuel. The resulting costlier petroleum in the country was aggravated by spikes in oil prices in the world market. This, along with price increases in rice—hounded by supply issues on account of the National Food Authority (NFA) failure to import enough stock—were among those that caused inflation to post higher-than-expected levels in April, May and June.
Sen. Aquilino L. Pimentel III said he is keen to find out where the “wrong predictions” came from, alluding to the aftermath of the TRAIN. “I said before that we need to know the names of those analysts who made the wrong predictions,” Pimentel said, “so that we will not depend on them in the future.”
The former Senate President said Finance Undersecretary Karl Kendrick T.Chua should provide names “because it was [Usec Chua] who explained to us the predictions of these experts as to long-term trends.”
‘No guarantees’
Sen. Gregorio B. HonasanII , however, told the BusinessMirror it would be “unrealistic” for the Senate to seek guarantees from the Executive officials endorsing TRAIN 2 this early.
“No…it is unrealistic to ask for guarantees from anybody considering so many eco-pol [economic political] variables and imponderables and not only because of TRAIN 1 experience,” Honasan said in an SMS.
Meantime, Honasan suggested that lawmakers reviewing the controversial revenue measure can exercise “best effort prioritization and serious fact checking.”
Sen. Joseph Victor G. Ejercito indicated he may not even vote for TRAIN 2 if its proponents fail to provide “accurate and well-studied data.” The Department of Finance and National Economic and Development Authority have been citing statistics indicating that many of the fiscal incentives enjoyed for decades by certain sectors have not been productive in drawing new investments or expanding business or more jobs; however, lawmakers keep hearing warnings from business groups that an ill-considered removal of certain tax perks—a key plank of the next-round reforms—could drive away business or prevent those eyeing the Philippines from actually coming in.
“I will not even think about considering the TRAIN 2 package unless I get clear guarantees from our economic managers that this measure will not result in more hardships for the Filipino people,” Ejercito said in a text message to the BusinessMirror.
Ejercito asserted that “government economists need to provide us with accurate and well-studied data and, more importantly, exhibit complete transparency and honesty.”
Sen. Richard J. Gordon said the Senate need not require guarantees from anyone when it makes laws. “We all have to base our judgment on national interest, not on just popularity or suasion,” said Gordon, adding, “we have to decide what is best for the nation like a good father of a family.”
For his part, Sen.Francis G. Escudero said the Executive officials seeking lawmakers’ support for early passage of TRAIN2 “cannot make that guarantee.” Besides, Escudero added, “I do not think the Senate will believe any such guarantees from them.”