THE Budget secretary has ruled out suspending the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law, citing the potential disruption to government revenue collection, and added that measures are in place to mitigate the impact of higher prices, including the creation of more and higher-quality jobs.
“For some reason, people perceive inflation in a different sense. Every time there’s a price increase, they think it affects their welfare. Of course it does, but if you have earned enough money, for example — you had a salary increase of 10% and you have a price increase of 2% — I think that should not be a big problem,” Budget Secretary Benjamin E. Diokno said during a briefing on Wednesday.
“To us, our concern is to create more jobs, more quality jobs and of course minimize inflation,” he added.
Legislators have been calling for a review of the TRAIN law after inflation rose to 4.5% in April, breaching the central bank’s 2-4% target band.
Mr. Diokno said that the government’s P8.4-trillion medium-term infrastructure program is expected to generate about 1.1 million jobs annually.
He added that a Philippine delegation will be sent to the Middle East to convince construction workers there to return to the Philippines for work, since there’s “little construction activity in the Middle East.”
Mr. Diokno said that the economic managers will brief President Rodrigo R. Duterte later that day, with inflation as the “most important issue.”
He said that it is the first “formal” Presidential briefing of the economic team, consisting of the heads of the Department of Finance, National Economic and Development Authority, and the Bangko Sentral ng Pilipinas.
On legislators’ proposals to review the TRAIN law, Mr. Diokno said: “Suspending the law is, to me, out of the question. It has to be implemented. We admit that there might be some transitory increases in the prices. But we have provided some mitigating measures in the law itself that will help those who will be affected,” referring to the P200 monthly unconditional cash transfers, which will rise to P400 per month starting next year until 2020.
“So suspending the law will do more harm than good,” he added.
Mr. Diokno said that a suspension will “upset” the tax bureaus’ target-beating collection performance.
The TRAIN law cuts personal income, and estate and donors taxes, while raising taxes on cigarettes, fuel, minerals, coal, sugary drinks, and automobiles, among others.
He said that the overall increase in prices is “transitory.”
“We don’t expect this to linger. We expect prices to normalize maybe during the second quarter of the year or in 2019,” he added.
He said that the shift to the tariffication scheme for rice imports and away from the quantitative restriction (QR) regime will help ease inflationary pressures, and also generate more revenue for the government from import levies.
Although President Rodrigo R. Duterte has said he is moving to eliminate the QR system, legislation is needed to amend Republic Act (RA) No. 8178, or the Agricultural Tariffication Act, before actually allowing free rice importation by private traders. The House of Representatives has approved a measure at committee level, while the Senate has yet to come out with a committee report.
The Finance department has said that the proposed scheme would cut rice prices by up to P7 per kilo, and slash headline inflation by one percentage point. — Elijah Joseph C. Tubayan

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