TRAIN worsens burden of inflation on poor – IBON

Almost 18 million Filipino families are already hard-pressed to survive on incomes below the family living wage of Php30,000 per month estimated by IBON

Research group IBON said that higher prices as reflected in the accelerating May 2018 inflation bears heavily on the poor, and that the recently passed Tax Reform for Acceleration and Inclusion (TRAIN) law is a significant reason for rising prices. TRAIN imposed new or higher excise taxes on oil and other products, the group said.

Prices went up generally by 4.6% last month compared with the same period last year. The latest inflation rate is 1.7 percentage points more than the 2.9% rate in May 2017. According to the National Economic and Development Authority (NEDA), the top three items driving high inflation were fish and seafood (0.65 percentage points), fuel and lubricants for personal transport equipment (0.60 percentage points), and bread and cereals (0.56 percentage points).

Inflation has shot up to a five-year high since the enactment of TRAIN. The law aggravates the inflationary impact of more expensive global oil and the peso depreciation on a wide range of basic goods. According to IBON, it has been clear since last year that these would accelerate inflation.

Oil price hikes in particular impact on the prices of other commodities because it is widely used in producing and transporting food and other basic goods. Fish and other seafood for instance directly bear the impact of more expensive fuel. A recent case study by fisherfolk group PAMALAKAYA showed that fisherfolk now pay Php66.75 more for the five liters of diesel they use on every fishing trip – or an additional Php1,335 per month for 20 days of fishing.

The administration’s insistence on TRAIN only shows its insensitivity to consumers and the working people in its drive for higher revenues, said IBON. As it is, almost 18 million Filipino families are already hard-pressed to survive on incomes below the family living wage of Php30,000 per month estimated by IBON.

IBON also warned that further price increases are certain in the coming years. TRAIN raises excise taxes on the whole range of oil products again in 2019 and 2020. This includes the socially sensitive items of diesel, kerosene and LPG.

TRAIN’s taxes raise oil prices permanently and greatly burdens low income families, IBON stressed. Administration economic managers have long known about this and so provided for small cash transfers to the poorest households. These are temporary though and will be lifted after 2020 when the prices of basic goods and services will have already increased substantially. The public interest demands reconsideration of the repressive TRAIN tax law, IBON said.  ​###​




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