Senator Sherwin T. Gatchalian, concluding an initial inquiry on the inflationary effects of the administration’s Tax Reform for Acceleration and Inclusion, indicated on Thursday that runaway inflation could compel the Senate Economic Affairs Committee to move for suspension of the TRAIN law, the first wave of tax reforms of the Duterte administration.
“We are monitoring inflation carefully,” Gatchalian, committee chairman, told reporters after getting updates from top officials of the National Economic and Development Authority, the Departments of Trade and Industry, Budget and Management, Social Welfare and Development, Agriculture and Transportation, the Philippine Statistics Authority, Land Bank of the Philippines, Sugar Regulatory Administration, National Food Authority and the Tariff Commission.
Apart from the TRAIN law’s inflationary effects, Gatchalian’s committee was also tasked to review the status of the law’s implementation and the effectivity of social mitigating measures and other counter-inflationary measures lined up by the Duterte administration.
“What we are expecting at the minimum is the delivery of social mitigating measures,” the senator said, citing the National Food Authority’s rice supply discount coupons, as well as transport fare discounts for daily commuters.
“Let us also look at lowering tariffs outside of TRAIN,” the senator suggested.
In addition, Gatchalian indicated they are keen to review an estimated P120 billion worth of other TRAIN mitigating measures even as he observed that, “no one is putting it together.”
This prompted Sen. Paolo Benigno A. Aquino IV to press for closer Senate scrutiny of the status of measures to mitigate higher tax impositions under the TRAIN law.
“I will look at it in the national budget deliberations,” Aquino vowed, prompting finance officials to assure senators they are already “working on it.”
Gatchalian told reporters the committee plans to conduct “more hearings on inflation and and mitigating measures inside and outside of the TRAIN law.”
“We would like to see and show that things are being done [to mitigate the tax burden],” said Gatchalian, adding, “It is good to show the public we are acting fast and addressing issues quickly…which is why we are prodding implementing agencies to produce results.”
Economic managers had earlier defended the TRAIN law amid the barrage of criticism as inflation steadily climbed the past months, exceeding government targets and prompting the Central Bank to deliver the third policy rate cut hike this year, the latest, a 50-basis-point increase.
Finance officials insisted TRAIN alone was not to blame for inflation, as other factors triggered the sharp and steady climb in prices—notably, the global oil price hikes that compounded the higher excise fuel tax mandated in TRAIN, and the rice supply issues that jacked up prices of the staple in the local market.
Lawmakers in both chambers have started deliberations on the next-wave tax reforms after the Executive assured them that this new package does not impose taxes, but cuts the corporate income tax and rationalizes fiscal incentives. A tax amnesty is also being discussed.
Gatchalian lamented that other mitigating measures were not being implemented on time. “On top of that, [I have not heard of any new] mitigating measures [because] Pantawid Pasada [was also] delayed. It can only be fully implemented in September. The conditional cash transfer is also greatly delayed and will take till September to complete. So [this is one of the dismaying issues, because we’ve been discussing this since] last year. So [everything is] delayed.”
Gatchalian said the committee will conduct a thorough review of TRAIN “to assess if we will still continue the second tranche in 2019.”
The senator also warned that implementing government agencies that failed to de-liver mitigating measures may be held liable. “[They have a] liability in terms of performance, because that’s in the law. But that’s why, we are holding these hearings regularly so we can push and remind them that there are mitigating measures mandated by law,” he said in a mix of English and Filipino.
Image credits: Roy Domingo