MANILA � The Department of Finance (DOF) warned Monday that suspending the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law would do more harm than good in the economy.
DOF Assistant Secretary and spokesperson Paola Alvarez made this reaction amid calls by lawmakers to suspend the TRAIN law implementation to lessen impact of inflation rate increase triggered by oil price hike in the world market.
Alvarez said the suspension will affect infrastructure projects particularly under the Build, Build, Build program as well as basic services like the free tuition program for all public universities and colleges and social grants to at least 10 million families.
Yes I oppose the suspension. You cannot just suspend it because our conditional and conditional cash transfers, we are increasing. You need to give them education, healthcare, they need a job, Alvarez said in a Palace press briefing.
Alvarez said an executive order is not enough to suspend the TRAIN law, because when it's legal, we need to amend, we will pass the law again.
If they suspend your whole TRAIN law all together, you cannot do that because we need a law to amend another law, she added.
On the growing clamor to suspend the increased rates of excise tax on petroleum products for this year, Alvarez said it could be done only if the prices in the world market hit USD80 per barrel.
If the prices reach USD80 per barrel, Alvarez explained that the suspension of excise tax will be the next tranche in 2019.
It's also hard for us to suspend, midyear, because you have already projected in your appropriations, in your revenues and in your budget, those things that you will fund and your budget allocations are also set in place, she explained.
She said the government has an array of measures to mitigate the effect of rising oil prices which are mainly the result of rising crude oil prices in the world market and not of the TRAIN law.
Actually we gave more. For example, the government is releasing PHP33 billion monthly as disposable income for the people, she said.
The Department of Social Welfare and Development (DSWD) has so far released some PHP4.3 billion to the Land Bank of the Philippines for some 1.8 million Pantawid Pamilyang Pilipino Program (4Ps) beneficiaries with existing LandBank cash cards, according to DOF.
Another 2.6 million household beneficiaries are in the process of getting their cash subsidies in May and June. For 2018, some PHP24 billion will be released to cover the poorest 10 million households.
Alvarez said the government is also preparing the fuel vouchers for the public utility vehicles.
Alvarez described the inflation rate increase moderate and normal in a growing economy.
If you look at the month-to-month progression of the impact of TRAIN on inflation, it is actually decreasing. So it means that the effect of the TRAIN on inflation is actually softening, she said.
What we have is that TRAIN only gave an impact of 0.4 percentage points to the overall inflation rate, she added.
Alvarez said inflation rate increase is not new since it is on the top three concerns of every Filipino since 2010.
What we are trying to say is that when you look at inflation, it's not all about TRAIN, she said.
She said the latest Social Weather Station's survey showing decrease on self-rated poverty and hunger is another proof that inflation is moderately increasing.
Alvarez said the implementation of the TRAIN law has prompted the S&P credit ratings to give the Philippines a positive rating from stable to BBB plus.
This is positive for our economy because it signals abroad and the international market that we are a very investible country, she said.
Alvarez said TRAIN has also contributed more money in people's pocket due to simplified and lowered personal income tax.
We actually gave money to the people for them to spend; when we gave unconditional cash transfers, we also increase the spending power of the people as well as gave free education, that will also contribute to inflation, because once you give more money in the market, right now people instead of saving, they actually spend, she explained. (PNA)
Source: Philippine News Agency