The chairman of the Senate Economic Affairs Committee asserted on Monday that the Duterte administration’s revenue-raising package, called Tax Reform for Acceleration and Inclusion (TRAIN), is not to blame for rising inflation.
“As of this point, TRAIN is not the reason for the rise in prices,” Sen. Sherwin T. Gatchalian said. “It is a fluctuation on the global oil prices, as well as the depreciation of the peso.”
Saying “these are the two main causes,” Gatchalian noted recent fluctuations on oil prices. “Definitely, these are the ones affecting inflation right now. We will see the full effect of TRAIN in terms of inflation come May,” the senator said, adding: “All the way until August, this is really the timetable wherein we will feel the effects of tax reform; but, right now, not yet.”
But he confirmed he will convene another committee hearing before then to review, among others, the mitigating measures in the tax-reform law.
“The mitigating measures are there; for example, the cash-transfer subsidy adjusted to P200 this year, and we urged the Department of Finance [DOF] and Neda [National Economic Development Authority] to really implement it. The money is there, [amounting to] P24 billion,” he added.
Gatchalian said 10 million beneficiaries, or 10 million families, will receive P200 every month. “So it should be implemented already because the money is there. This is on top of what they are getting from the 4Ps, which is about three thousand pesos,” he stressed, referring to the Pantawid Pamilyang Pilipino Program.
He added that, by next year, beneficiaries will be receiving P300 every month from the cash-transfer scheme.
At the same time, Gatchalian agreed with the DOF’s stance that the inflation rate is still manageable.
“The inflation rate right now is manageable; it’s not due to the tax reform because we can see the fluctuations in oil prices and the peso depreciation,” but “that does not mean that we should not implement what is already included in the law, which is the cash transfers and the national ID system.”
He explained that the national ID system is “also very important, because this is where we will release the targeted subsidies, such as discounts in transport fares and rice supply.”
The senator noted there are at least four mitigating measures lined up to address inflation: “No. 1 is the cash transfer of P200 every month; No. 2, 10-percent discount on fares for indigents; No. 3, 10-percent discount in rice supply for the poor; and, No. 4, removal of quantitative restrictions so our traders can import cheaper rice, imposing only 35-percent tax. We estimate, this will bring down the cost by almost P20 per kilo if we will allow importers to bring in rice from other countries.”
Gatchalian pointed out that rice takes up the biggest budget of poor families. “Almost 20 percent of the budget of our poorest families goes to rice so that, when the price of rice goes up, this is immediately felt by them.”
He said the consensus at the recent senate hearing was to find ways to bring down rice prices, as this will have “the quickest positive impact on our countrymen.”
Gatchalian added the Senate hearing also elicited estimates by the University of the Philippines that the government’s current cash-transfer rates are “not enough” to sustain poor families. “We will need approximately P500 pesos to support our poor families, the poorest of the poor; that is why we are looking to raise it by P300 more to add up to P500 to support poor families.”
The senator suggests that one way to do this is to implement “nonrevenue measures,” such as discounted rice prices for indigents.
“We are also looking for other ways to raise the subsidies.”
“That is what the Senate will likely do; we will pass a law to enable traders to import rice at cheaper prices, even as we ensure protection for our local farmers,” Gatchalian added. “Hopefully, our recommendation is implemented before the first half of the year,
before June.”