MANILA -- Department of Finance (DOF) Secretary Carlos Dominguez III on Tuesday said it is unfair to attribute the current surge in inflation to the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law.
During a hearing of the House ways and means committee on the second tax reform package, Dominguez said TRAIN contributes only "four-tenths of a percent" to the inflation rate. "This means that for every additional peso our people have to spend because of inflation, only 9 centavos can be attributed to TRAIN," Dominguez said in his opening statement.
TRAIN, the first package of the government’s tax reform program, reduced personal incomes taxes but increased excise taxes on fuel, sugar-sweetened beverages, and motor vehicles since the law took effect last January 1.
Philippine inflation rate reached a five-year high at 4.5 percent in April 2018, which is much higher than the government's inflation target range of 2 percent to 4 percent for the whole year.
Dominguez, however, said fully two-thirds of last April’s 4.5 percent inflation rate is "typical of a rapidly expanding economy', adding that the remaining is due mainly to the sharp increases in key imported commodities specifically oil, the realignment of currency exchange rates, and a robust increase in domestic demand.
The Finance chief said the tax reform law's inflationary impact is on tobacco and sugary beverages. "But in the case of these “sin” products, the tax rate is intentionally punitive to improve the health of Filipinos. At any rate, the inflationary impact of TRAIN is expected to diminish over the next few months," he said. (PNA)
