Filipino consumers have been coping with the rising costs of goods and services over the past seven months. The impact was most felt by the poor.
The 11.1 million self-rated poor Filipinos saw their daily living expenses increase this year, as prices of basic goods and commodities swelled amid the implementation of package 1 of the Tax Reform for Acceleration and Inclusion law.
Consumer advocacy group Laban Konsyumer Inc. said the Train law had an all-encompassing effect on prices of goods.
“There’s no other economic policy implemented in the wake of 2018 but the Train Law. The law has direct and indirect impact on the price of goods with price hikes particularly felt by the poor,” said Laban Konsyumer president and former Trade undersecretary Victorio Dimagiba.
Dimagiba said this was exacerbated by surging prices of world crude.
He said when Congress enacted the Expanded or Reformed Value Added Tax to 12 percent under Republic Act No. 9337, the law added mitigating measures “to lessen or minimize its impact on consumers.” It reduced to zero the excise taxes on kerosene, diesel, LPG and bunker fuel, or the so-called “socially sensitive products.”
“The Train law removed those zero excise taxes and on top of the 12-percent VAT. The Train law is, thus, called by many as anti poor. The point is that they took the gamble that the excise tax in petroleum will not impact on cost of goods and services. But as figures show, it did. It also impacted on consumption. Now, where and how do we pick up the slack?” he asked.
Dimagiba said while world crude prices started their descent, it never affected the behavior of the Philippine inflation rate.
July inflation climbed to a five-year high of 5.7 percent in July from 5.2 percent in June, data from the Philippine Statistics Authority showed.
“When they made assumptions for 2018 to 2022 , they assumed that Train 1 will pass the bicameral deliberations. For me, they assumed a very, very optimistic inflation rate. They had been overconfident that inflation will stay at the vicinity of 2 to 4 percent in the entire 2018. That’s the same optimistic forecast they had in 2017. They were so positive that Train 1 will not impact on inflation, but that did not happen,” he said.
The consumer confidence index was also on a downhill as it declined 1.7 percent in the first quarter of 2018 from (0.5 percent in the last quarter of 2017).
Consumers said in a report that most of their take-home pay was spent more on electricity, food, nonalcoholic and alcoholic beverages, fuel, water and transportation.
“What is even worse, after Train 1 is not just Train 2, but the shifting of characters of the sectors affected by these measures. Hoarding is a problem that has been at play even before these measures came about. Smuggling could come into play also, but like hoarding, it has been there ever since. This time around, I see more hoarders and smugglers who will take their chances for better market prices,” Dimagiba said.
Crude prices, he said, would continue to decline to a rate of $65 to $70 a barrel. Despite the slight reduction in world crude, prices of commodities will continue to peak because of higher taxes, he said.
“When you hit on these products, it will create a problem to those people who are not able and capable to pay for increases. Yes, it’s a given that for those employed and earning so much, the elimination of personal tax was a relief. But in exchange, they have to brace for other forms of taxes, most likely on petroleum and sugar-sweetened beverage and other products, as well. That’s for the gainfully employed. How about those informally employed,” Dimagiba said.
A survey by poll group Social Weather Stations in the second quarter revealed that a family in Luzon needed at least P15,000 for their monthly expenses to be considered non-poor. The figures were P11,000 in the Visayas and P15,000 in Mindanao.
Based on these figures, there were 11.1 million self-rated poor in the Philippines, the survey showed.