DOF: TRAIN Law not the primary cause of five-year high inflation

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Metro Manila (CNN Philippines, May 30) — The Tax Reform for Acceleration and Inclusion (TRAIN) Law should not ultimately be blamed for the rise of consumer prices, Finance Assistant Secretary Paola Alvarez asserted on Tuesday.

She said that based on the study by DOF, Bangko Sentral ng Pilipinas and the National Economic and Development Authority, the TRAIN Law accounted only for 0.4 percent of the five-year high 4.5 percent inflation rate in April.

“This means that regardless of whether we imposed the TRAIN Law, the prices of fuel will still go up,” she told CNN Philippines’ Newsroom.

Implemented last January 1, TRAIN Law or Republic Act No. 10963 slashed personal income tax rates but raised excise taxes on fuel, motor vehicles, and sweetened beverages.

Alvarez attributed the recent oil price hike to the rising world oil prices and the weakness of the peso. But she said the government is now in talks with members of Organization of the Petroleum Exporting Countries (OPEC), as well as Russia, to supply the country with affordable oil.

Peso depreciation is not also entirely bad for the economy, she said. “The OFW remittances to the Philippines will actually give more spending power to the beneficiaries because of the change in the exchange rate,” Alvarez said.

Alvarez said moderate inflation is normal in a growing economy in the Philippines. She also cautioned that some businesses are using the TRAIN Law as an excuse to commit profiteering.

It can be recalled that transport network company Grab Philippines filed a fare hike petition in January, citing the TRAIN Law as a reason for the increased charges. The Land Transportation Franchising and Regulatory Board has asked Grab to amend its petition for transparency.