MANILA – Suspending the tax reform law, which was blamed for the continuing spike in commodity prices, will have little impact on tempering inflation, the economic managers of the Duterte administration said Tuesday.
“Suspending TRAIN and adopting other band-aid solutions will only have a minimal and short-term impact on inflation and will stifle our growth, further delaying our nation’s progress toward becoming an upper-middle-income country by 2019, such that around six million Filipinos would be lifted out of poverty by 2022,” the administration’s economic team said in a joint statement read by Budget secretary Benjamin Diokno during a press briefing in Manila.
Duterte’s economic team also consists of Finance secretary Carlos Dominguez and Socioeconomic Planning secretary Ernesto Pernia.
The first package of the tax reform law reduced personal income tax rates and increased the excise taxes on petroleum products, automobiles, and imposed levy on sugar sweetened beverages.
“We must keep in mind that TRAIN reformed a previously unfair and harsh tax regime. It lowered the personal income taxes of most Filipinos except the very rich – increasing the take home pay of 99 percent of income tax payers,” the economic team said.
“This, coupled with free higher education and new jobs created through our infrastructure build up, enables the Filipino people to spend more for themselves and for the benefit of their families.”
Inflation clocked in at 4.6 percent in May, faster than the 4.5 percent reported in April.
Diokno reiterated that the impact of TRAIN on inflation remains minimal at 0.4 percentage point.
“That amounts to 9 centavos for every additional peso due to inflation,” the Budget chief said.
The economic managers said the government is closely monitoring and taking steps to address the difficulties experienced by Filipino families today arising from higher prices.
“We, the economic managers of the Duterte Administration, reiterate the government’s unwavering commitment to improve the lives of the Filipino people and bring lasting change to our country,” according to them.
“The administration is steadfast in the conviction that we can build a prosperous, high-income economy with a predominantly middle-class society by 2040. Toward this objective, our economic program must generate the required resources so that we can continue to make investments in our people’s health and education, security and public order, and to build world-class infrastructure.”
The economic team said TRAIN is vital to the “Build, Build, Build” infrastructure program.
“We must bridge the infrastructure gap that has painfully made our country lag behind our ASEAN neighbors. Through this program, we seek to create more than one million jobs for our fellow Filipinos through 2022, while reducing logistics costs for businesses, especially micro, small, and medium enterprises (MSMEs), many of which are located in the provinces.”
“We remain committed to doing all we can to invest in our people, and build safer communities and better infrastructure so that everybody will prosper. The economic team pledges its support in fulfilling President Rodrigo Roa Duterte’s promise of a strongly rooted, comfortable and secure life for all Filipinos. The Philippines is already on the path of high and sustained growth. We must stay the course,” joint statement read. (GMA News)
