In the months of debate prior to implementation, there were already fears that the government’s much-vaunted Tax Reform Acceleration and Inclusion law would cause inflation that would negate the much-touted benefits and worsen the economic struggles of the impoverished segment of society. The government’s economic managers tried to appease the apprehension by saying that while, yes, there would be inflation, it would be minimal and temporary.
Plus, they said, there would be safeguards put in place, various safety nets to protect the poor segments of the populations who are below the income tax threshold. The financial experts of government confidently gave assurances that the eventual rewards of TRAIN would far outweigh the passing inconvenience.
Fast forward to the present and we just witnessed five straight months of record inflation. Clearly, experts didn’t expect things to be this bad. Once again, the government’s economic managers had at first tried to downplay the disaster, laying the blame on external factors, such as the rising prices of petroleum in the global market. But there’s a limit to such palliative explanations, even if they do contain a sound degree of truth.
Inflation nationwide hit the 5.7 percent mark last month, the fastest in half a decade. This translates to a drastic reduction in a family’s purchasing power; inflation watchers say that for every P10,000 worth of goods and services last year, it can only buy P9,430’s worth last month. The surge is felt even more deeply in Metro Manila, where inflation hit 6.5 percent, up from 5.8 percent last month and 2.9 percent in the same month last year.
Published figures show that consumers, most particularly in the capital, have to deal with surging prices of alcoholic beverages and tobacco, up 21.9 percent year-on-year; transportation, up 8.9 percent; housing, water, electricity, gas and other fuels, up 8.2 percent; food and nonalcoholic beverages, up 7.2 percent; and even health, up 4.5 percent, among others.
The highest inflation—7.5 percent—was recorded in the already-impoverished Autonomous Region in Muslim Mindanao, while the
lowest was in Central Luzon at 2.7 percent. Even so, it is the poorest Filipinos who continue to feel the harsh impact of inflation, with the bottom 30 percent income households suffering from a 6.5 percent jump in the prices of goods.
Nationwide, the Philippine Statistics Authority said the inflation is due to a 7.1-percent jump year-on-year in the price of food and nonalcoholic beverages. For one, the price of rice, the staple food for tens of millions of Filipinos, has gone up amid declining inventory from 2.57 million MT in July to 2.36 million MT last month, a sharp 8.2 percent drop. The National Food Authority buffer stock is also almost depleted.
Another thorn in the life of Juan dela Cruz, the jeepney fare hike took effect on July 9, with the minimum fare up to P9 from P8 and even more petitions for fare hikes are being filed by transport groups.
All these translate to severe income loss for workers whose wages are already unsustainable to begin with. Some P60 million Filipinos saw the value of their earnings go down by as much as P2,700 in the first six months of the year, according to research NGO Ibon Foundation.
A recent round of wage hikes—ranging from P9 to P56—approved by the Department of Labor and Employment was hardly enough to cover the lost buying power of workers. The other measures that were supposed to cushion the impact of TRAIN in the form of cash transfers, fuel subsidies, and, more recently, plans to flood the market with affordable basic goods, couldn’t come sooner, labor groups said.
Interestingly, there is even an attempt by government to “deceive” Filipinos on inflation by downplaying its impact, said opposition Rep. Edcel Lagman of Albay. But even with minimal comprehension of economic concepts, the poor have the practical wisdom of living on the ground, where the real impact of government policy cannot be disguised by any amount of spin.
As Filipinos bear the brunt of inflation, there are now debates, even from the very legislators who passed the TRAIN law, if they moved too fast or was it even a good idea in the first place. Alongside calls to immediately implement mitigating measures are calls to rethink and even suspend it. As far as taxation issues go, for instance, there are chronically massive gaps in the administration of government revenues and a lifelong example is the way that the Bureau of Customs is policing our ports, an inefficiency that notoriously causes the government hundreds of billions of potential collections. But it seems that even with the power and grit of President Duterte’s stopping smuggling would remain an unconquered challenge. Imposing new taxes is an easier revenue generation solution.
Polls consistently remind us that the most urgent national concerns for the biggest segment of the population are still all economic in nature: increasing the pay of workers, controlling inflation, and reducing poverty. The Duterte administration has fashioned itself as a zealous pro-poor regime to differentiate itself from other administrations blamed for non-inclusive growth. Two years into office and as we come closer to the 2019 midterm elections, there is now a rising clamor, especially from the poor, for ambitious campaign promises to be kept.