Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said Thursday monetary authorities will closely monitor the impact of the implementation of the Tax Reform for Acceleration and Inclusion Act on consumer prices and will not hesitate to adjust the monetary policy stance if needed.
Espenilla said in a speech during the joint meeting of Rotary Club of Manila, Rotary Club of Makati West and Rotary Club of Forbes Park that he was expecting inflation to remain within the target range of 2 percent to 4 percent until 2019.
Espenilla said further increases in global crude oil prices might result in inflation trending in the upper bracket of the target range.
“Once the national government’s tax reforms take effect, there could be some transitory pressures on prices. On the whole, these reforms will result in productivity gains over the medium term. Also with these tax changes in mind, BSP looks out for possible price spirals,” he said.
“You can count on us to timely adjust the monetary policy stance to ward off any threat to our inflation target,” Espenilla said.
Train, the first package of the Duterte administration’s Comprehensive Tax Reform Program, took effect this month.
The Trade Department assured consumers that prices of commodities, particularly fuel and sugar-sweetened beverages, would not be affected by the tax measure until the third week of January.
“We’re expecting the change to take effect either Jan. 15 or Jan. 21. To be honest, there is not much of an increase to speak of unless it’s the fuel or the SBBs themselves,” Trade Secretary Ramon Lopez said in a news briefing Thursday.
He said of the increase in VAT in fuel, the estimated effect is about 5 percent of the retail price. Based on the newly-approved Train, the increase in the excise tax on diesel should be P2.50/liter in 2018, P4.50/l in 2019 and P6/l in 2020, while the tax on fuel oil would go up similarly as that of diesel within the same time frame.
The excise tax on coal will increase by P50 per metric ton in 2018, P100/MT in 2019 and P150/MT in 2020.
Lopez said that among basic necessities, the indirect effect of fuel tax hike would not even amount to P0.20. Sardines for instance will only increase by a mere P0.04. Bread loaf and pandesal will reflect increases of P0.14 and P0.06.
Among the basic necessities of condensed milk, evaporated milk and detergent soaps, the increase will also amount to less than P0.20 while on prime commodities only cement will have higher suggested retail price, he said.
Lopez told traders that price fixing is an offense with a fine of not less than P20,000 to P1 million. With Othel V. Campos