Budget Secretary Benjamin Diokno on Wednesday said Filipinos should be “less of a crybaby” over the rapidly rising prices of goods and services as a result of the government’s tax reform law.
“Remember, we had $135 per barrel under GMA,” he said at a forum Wednesday, referring to the world price of crude during the administration of President Gloria Macapagal Arroyo.
“The thing to realize is that we’re not going to keep this money in the Treasury. We are going to spend this for mass transit system(s) and who will benefit from this eventually? It’s also the poor,” Diokno said.
At the same time, Diokno rejected calls to suspend the excise tax on fuel under the Tax Reform for Acceleration and Inclusion Law, saying this would stall a number of government infrastructure projects.
“The tax reforms cannot be stopped at the middle of the game because a number of infrastructure projects will be stalled… The government eyes long-term gains from implementing the tax reforms,” Diokno told the Manila Standard in a phone interview Wednesday.
The Department of Finance earlier said TRAIN would generate funding for the administration's P8.4- trillion “Build, Build, Build” infrastructure program, which aims to build more roads, bridges, airports, seaports, railways, and irrigation projects to spur economic activities.
For example, a 25-kilometer subway set to be built in Metro Manila would decongest the metropolis of heavy traffic, which one Japanese study says causes P3.5 billion in economic losses daily.
President Rodrigo Duterte signed the TRAIN Law in December 2017, and it took effect in January 2018.
Some have urged the government to stop its implementation because of its impact on inflation, which spiked to 4.5 percent in April, from 4.3 percent a month before.
The April inflation brought the first-four months’ average to 4 percent, which is the upper limit of the government’s target range of 2 percent to 4 percent for 2018.
But the Finance Department said TRAIN is not the only reason for the higher inflation.
Finance Undersecretary Karl Kendrick Chua said rice prices spiked because of a supply problem, a weak peso and rising oil prices abroad.
Chua said TRAIN accounted for only 0.4 percentage points of the 4.5 percent inflation. “In other words, if you could buy items for P100 last year, you need to spend P104.50 now for them and of that increase, only 0.40 was due to TRAIN,” Chua said.
Chua said it was easy to blame the tax reform package and ask for its suspension but “we have to match the proposed solutions to issues we want to address, and TRAIN is not the main reason for inflation.”
The peso has been on a downward trend against the US dollar since the start of the year and on May 29, it closed at 52.64, nearly a 12-year low due to the markets’ anticipation on the next policy moves of the US Federal Reserve.
Finance Secretary Carlos Dominguez III earlier said the department was preparing to submit a proposal to Congress to further increase the excise taxes on the so-called “sin products” in a bid to discourage the people from consuming these products that are bad for health.
Diokno, meanwhile, said there must be a further review and studies on the proposals from the labor sector to increase the daily wages of workers so that they could cope with the rising prices of goods and services due to the TRAIN Law.
“Employers may not be able to afford it and there might be closures of firms so employment and the economy will be affected,” Diokno said.