The Palace assured the public again over the weekend that the government was taking steps to address the high prices of goods after the country’s inflation—the rate at which the price of goods and services rises—climbed to a high of 6.7 percent in September.
Presidential Spokesman Harry Roque trotted out what is now the familiar menu of measures taken to tame the impact of inflation, the foremost of which is to increase imports of agricultural products to boost supply and lower prices in the market.
The rate of inflation jumped to an almost 10-year high in September, according to data released Friday, putting pressure on President Rodrigo Duterte to act as the cost of food and fuel hit the country’s poor.
Consumer prices have risen every month this year, with food surging further after Typhoon “Ompong” smashed into the country’s agricultural heartland in Luzon in mid-September.
The Palace spokesman also said the government has given away cash and fuel subsidies to specific sectors affected by the high consumer prices.
Almost in passing, the Palace spokesman also mentioned the possibility that the next fuel tax rate increase could be suspended if the monthly average of crude oil hits $80 a barrel, under the administration’s Tax Reform for Inclusion and Acceleration law.
The President’s economic team, however, has been less than enthusiastic about foregoing the easy income from high excise taxes on fuel, which they insist has a minimum effect on inflation.
We tend to agree, however, with Senator JV Ejercito, who sees the next round of increases in excise taxes on fuel is going to plow into consumers like a freight train while our economic managers are dragging their feet and assuring us that all is well.
Ejercito notes that the TRAIN law allows the suspension of increases in the excise tax only if the price of oil stays at or above $80 a barrel for three months.
Furthermore, the TRAIN law says the Department of Finance and the Development Budget and Coordinating Council must meet to review the implementation of excise taxes before recommending any suspension.
Worse, such recommendation would only be made on an annual basis, and any suspension shall not result in any reduction of the excise tax being imposed at the time of the suspension—which means relief will not come promptly, if at all, to consumers suffering under the yoke of high fuel prices.
All of this matters because contrary to the claims of the economic managers, high fuel prices will drive up the costs of all goods and services that need to be transported. The vicious cycle that ensues will hardly tame inflation, but feed it.
The required action is clear—find a way, either by amending the TRAIN law or refining its implementing rules and regulations—to allow the immediate suspension of any new excise taxes on fuel taxes. That’s the measure that counts.