By Butch Fernandez, October 8 2018; Business Mirror
Image Credit to Manila Bulletin
PRESIDENT Duterte, with a joint resolution from Congress, can suspend the imposition of higher excise tax on petroleum products under the Tax Reform for Acceleration and Inclusion (TRAIN) law to curb skyrocketing costs of basic commodities, Senate Minority Leader Franklin M. Drilon said over the weekend.
Drilon projected that prices of basic goods will keep rising and will not stop because of continued oil-price hikes in the world market, adding, “As a result, our excise tax under TRAIN 1 will keep rising because it is dependent on the price of oil.” So, said Drilon, “Our first suggestion is to suspend the excise tax on petroleum products,” adding, “that is in the law.”
He acknowledged that the TRAIN law states suspension can only be done if the per-barrel price of oil stays at $80 for three months. “But I don’t think we need to wait for that because the President has the power to suspend the excise tax hike as a result of the price of oil,” asserted Drilon.
The Minority Leader, in a radio interview, suggested that Malacañang need not wait for the three-month period before suspending higher excise tax on fuel products. “It could be suspended. The President can request for a resolution to be passed by both houses of Congress and that will be granted immediately. This [passage of the resolution] can be done right away and it will bring down prices of prime commodities,” said Drilon, noting that Duterte has “enough political clout in both houses of Congress to pass a joint resolution.”
He acknowledged, though, that the economic managers appear to be resistant to such suggestions, and are instead pointing to simply carrying out the law’s provisions for safety nets for the sectors most direly impacted. “Maybe they [managers] do not feel the hardship of the people, that’s why their attitude is like that; but to me, that is wrong because the excise tax on oil should be suspended,” said the senator in a mix of English and Filipino.
Flood of rice
Meanwhile, he also proposed flooding the market with rice “because many of our ordinary people spend a lot on rice, [so] let us flood the market with rice.”
He pushed for the removal of the licensing power of the National Food Authority “so everyone can import rice.”
“We at the Senate are working to remove the quantitative restrictions on rice imports and will shift to a tariff system so that more rice can come into the country,” he said, noting these are among the suggestions being considered to bring down inflation.
Drilon added: “I have said long ago that instead of concentrating on Senator [Antonio] Trillanes, the Duterte administration should concentrate on this inflation. Rather than run after Trillanes, they should run after inflation because this affects our countrymen.”
The chairman of the Senate Committee on Economic Affairs, meanwhile, prodded the administration to fast-track delivery of the government’s mitigating measures lined up to ease the impact of inflation triggered by the latest round of oil-price hike.
“They should quickly deliver assistance under the Pantawid Pasada Program [PPP], because one of the reasons for inflation is the oil-price hike, which jumped to $80 per barrel in the world market,” suggested Sen. Sherwin T. Gatchalian, committee chairman.
Gatchalian said the latest oil-price increase, is expected to hit daily commuters with higher transport fares. “Because of the oil-price hike, the fares of ordinary people and transportation costs are most impacted. Right now, we have 180,000 vehicles covered by the PPP and have already been given the P5,000.”
Gatchalian batted for an increase in PPP subsidy “from P5,000 to P6,000” following the latest round of oil-price hike, adding that the program should even be expanded to include tricycles in the wake of the recent oil-price hike.
When the price of crude increases, he added, the government should also expand PPP coverage to include tricycles, which run on diesel, “because the tricycle fares charged to commuters will also go up. Tricycles should be included along with the public-utility vehicles [PUVs] that are getting subsidy through the PPP.”
This, even as Gatchalian noted the trend of inflation is showing signs of slowing down. “Hopefully, it will slow down further in the next few months.”
The senator, however, conceded that “we do not control the price of oil, which we import from outside…but we expect that oil supply will grow and, hopefully, when there is abundant supply the price will go down below $80 per barrel.”
“When it goes down from $80, then you can see some relief in lower prices of basic goods,” he added.
Asked about actions he anticipates to be taken by the Bangko Sentral ng Pilipinas, Gatchalian replied: “I expect maybe another 50 basis points until the end of the year but we are looking at it now [and] it’s a very volatile situation…. The situation now is quite fluid, so we need to closely monitor the situation in the Middle East with respect to oil, as that is truly one of the biggest factors for why we are getting hit by the spike in prices,” he said in a mix of English and Filipino.
At the same time, the chairman of the Senate Economc Affairs panel allayed concerns that continuing rise of inflation could trigger civil unrest.
“In the Philippines, that is impossible. I don’t think there will be any civil unrest,” said Gatchalian. “Our unemployment numbers are going down. Our economy remains to be one of the strongest in the region; but of course, [there are these] aberrations, [these things we cannot] control like the global situation…but fundamentally we remain stable. We have our international reserves, they are still good for six to eight months, fundamentally we’re still very strong.”