Government’s continued implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) means that TRAIN’s taxes will keep raising prices next year and make inflation higher than it should be.
Read: TRAIN still inflationary with lifting of fuel excise suspension
Research group IBON said that jeepney drivers and their families have suffered huge income losses from rising pump prices on top of facing rising prices of basic goods and services.
The initial and impending fare hikes give immediate relief but only temporarily.
Fare hikes only worsen the burden on commuters and the government needs to take a broader view of the situation including taking both short and longer-term measures.
Jeepney drivers have lost a total of Php18,855 from start of the year until September because of the oil excise tax under the first package of TRAIN and rising global oil prices.
TRAIN is to blame for around Php13,104 of this amount, said IBON.
The estimated cumulative Php18,855 loss in the first nine months means an average loss in income of Php2,095 monthly, IBON explained.
Jeepney drivers and operators petitioned for a Php2 fare increase to help the sector cope with the rising prices of goods and services and the impact of TRAIN.
IBON however said that the fare hikes are still not enough to compensate for drivers’ income losses since the start of the year.
Driver’s incomes fell drastically in the first six months of the year.
The provisional Php1 jeepney fare hike in July compensated for pump price increases in July and August but was not enough in September when their incomes again fell as pump prices rose.
Even the full Php2 jeepney fare hike to be implemented this November, which includes the July Php1 fare increase, will not be enough to restore their earnings to pre-TRAIN levels.
IBON estimated the income losses of drivers assuming 200 passenger trips and 20 liters of diesel consumed daily, prevailing fares, and incorporating expenses for maintenance and other miscellaneous expenses.
Monthly incomes from January to September were compared to that in December 2017 as the baseline income.
IBON pointed out that the government’s narrow focus on fare hikes is pitting jeepney drivers against the riding public.
Both already bear the brunt of relentless price increases not just of oil but also of other commodity items including food, said the group.
The interest of both drivers and commuters is better served by giving greater attention to the drivers of inflation. “Suspending TRAIN’s oil excise taxes immediately starting with those implemented in January 2018 will give immediate relief to jeepney drivers and consumers,” IBON executive director Sonny Africa said.
“The additional oil excise taxes in January 2019 should also be suspended so as not to add to already considerable inflationary pressures,” he added.
“Further fare hikes can be prevented and a rollback may even be possible if oil firms’ overpricing is reined in,” said Africa.
“The long-term solution should include fuller and more responsible regulation of the oil industry,” he concluded. #
Bayan Muna called for the fast-tracking of a bill aimed at giving substantial discounts for funeral services for the poor.
As high inflation rates affect even the dead, House Bill 3028 should be immediately passed to give indigent families a 50 percent discount in funeral services, Bayan Muna explained.
Authored by Bayan Muna Representative Carlos Isagani Zarate, the proposed measure aims to alleviate the rising costs of services due to the Rodrigo Duterte government’s Tax Reform for Acceleration and Inclusion (TRAIN) law, the group added.
“Hindi lang mga buhay ang nasasagasaan ng TRAIN, pero pati mga patay na rin. Sa minimum ay tumaas ng P1,000 ang funeral services sa ngayon, hindi pa kasama dito ang kabaong, lupa sa sementeryo at mismong pagpapalibing,” Zarate said.
“Our bill also mandates that dead persons belonging to ‘extremely poor’ families should be given free funeral services,” he added.
The government announced that inflation rates in the third quarter of the year has risen to more than six percent, driving prices of goods and services higher.
Bayan Muna said the House of Representatives shall tackle the proposed measure when it resumes its session this month.
“We hope that the House leaders would also fast track the bill’s passage so that poor families would not have to shell out more just to bury their loved ones. They are already grieving from their lost, it is doubly tragic that they should also be burdened to bury their dead,” Zarate said. # (Raymund B. Villanueva)
“Ang mga manggagawa na nananawagan ng pagwawakas ng kontraktwalisasyon para sa nakabubuhay na sahod ay naibigay ba ni Duterte? Ang ibinigay sa atin ay TRAIN. Taas-presyo ng mga bilihin na lalong nagpapahirap at nagpapagutom sa taong bayan.”—Einstein Recedes, Anakbayan secretary general
Days before President Rodrigo Duterte’s third State of the Nation Address on July 23, the Movement Against Tyranny gathered in Quezon City to assess the government economic policies and Congressional bills.
Economic experts, legislators and legal luminaries presented before the forum their assessment of Duterte’s tax reform law as well as efforts to amend both the Human Security Law and the Constitution.
Government is wrong in downplaying the contribution of the Tax Reform for Acceleration and Inclusion (TRAIN) law on recent big-time oil price hikes, research group IBON said.
The price of fuel products combined with the TRAIN increased since year-end 2017 to Php10.20 per liter for diesel, Php11.41 for kerosene, and Php15.14 for gasoline as of last week.
These prices now include excise taxes and value-added tax (VAT), respectively, said IBON.
The price of diesel has increased to Php41.70/liter from Php31.50 at the start of the year, for instance, while the price of kerosene has increased to Php50.40/liter from Php38.99/liter as of year-end 2017.
The price of gasoline is now Php56.47/liter from Php41.33 as of year-end 2017.
The adjustment in the price of oil products has been attributed to the increase in the Mean of Platts Singapore (MOPS) prices and changes in the PH Peso–US Dollar exchange rate.
MOPS for gasoline prices has had a net increase of US$7.91/barrel and a net increase of US$5.92/barrel for diesel during the same period.
The exchange rate of the Philippine Peso to US Dollar did not help lessen oil prices as the peso depreciated against the US dollar by Php2.42 also in the same period.
One of the formulas by the Department of Energy (DOE) assumes a Php1.00/liter change in domestic oil price for every US$3.00/barrel change in MOPS.
IBON however observed that applying this formula does not reflect the steep hike in oil prices.
Moreover, according to IBON’s executive director Sonny Africa, TRAIN’s new and higher taxes aggravate and intensify the impact of these oil price hikes.
The TRAIN law adds new excise taxes on diesel and kerosene and raises excise taxes on gasoline.
TRAIN imposes a new Php2.50 liter excise tax on diesel and Php3.00 per liter on kerosene, while increasing that on gasoline by Php1.65-2.65 to Php7.00.
The final taxes imposed are even higher because the 12% VAT is also applied to them.
Thus, of the net increase in the prices of diesel, kerosene, and gasoline, TRAIN has added Php2.80, Php3.36, and Php1.85/2.97 to the price of every liter, respectively.
This means that TRAIN’s taxes accounted for one-fourth of the increase in the prices of diesel and gasoline.
TRAIN keeps increasing the excise tax on oil products and by 2020 they will have permanently added Php6.72/liter to the price of diesel, Php5.60/liter to the price of kerosene, and as much as Php6.33/liter to the price of gasoline.
“Real wages are stagnant at very low levels and TRAIN’s new taxes and inflationary impact are an unnecessary additional burden on the majority of Filipinos who are low-income earners,” said Africa. # (Image from Philippine Gas Price Watch through IBON)
TRAIN will make the rich richer – The net impact of the change in income taxes, expansion of VAT coverage, new oil excise taxes, and inflationary effect is that the highest-earning 40% of Filipino households, or 9.1 million households with some 40 million Filipinos, will have more money in their pockets after the tax reform. This includes among the richest households in the country.
They have net gains because their increased take home pay from lower personal income taxes more than offsets losses from additional VAT, oil taxes, auto taxes, the sweets tax, and inflation. The net gains remain even if higher taxes on automobiles and especially on high-end luxury cars, which is sensible, are factored in.
Middle class households in the seventh to ninth income deciles certainly deserve relief from changing decades-old tax brackets. These include Filipino families whose only moderate incomes are doubly-eroded by inflation and by excessively high taxes. It can even be argued that the minimum figure for tax exemptions can be raised to those earning up to around Php33,000 monthly.
However it does not make sense for supposed tax reforms to give a corporate executive already earning Php303,059 monthly (or Php3.7 million yearly) an additional Php1,212. Nor does it make sense to only tax a company’s chief executive officer earning Php706,017 monthly (or Php8.5 million yearly) just an additional Php20,694; this is probably just what would be spent on a weekend family dinner. Yet the DOF’s TRAIN does just this while, to recall, taking hundreds of pesos away from the poorest Filipinos who already have so little as it is. The poorest are made to pay more out of much smaller incomes to begin with and this is not by any reasonable interpretation a “fairer and more equitable” tax system.
The DOF cites the supposedly higher income tax rate of 35% applied to the highest income bracket, compared to the current 32%, as proof of the progressivity of their proposals. This is a half-truth though because using the complete formula which includes a minimum lump sum and applying the tax rate only on the excess of income over Php5 million means that many of the country’s rich will actually end up paying less than under the current tax system.
The DOF also gives the example of the country’s top two income taxpayers whose take home pay falls in 2018 upon the tax reform to reinforce the impression that the new tax system is progressive. This is however an exaggeration and is oblivious to how the country’s super-rich use various legal and illegal strategies to avoid paying taxes including tax havens, off-shore accounts, shell companies and trust funds, smuggling and others.
The tax reform program really does nothing to address, and actually worsens, the continuing accumulation of massive wealth in the hands of a few. The country’s richest for instance also gain additional benefit from the lowering of estate and donor’s taxes to a flat rate of 6%, with the DOF estimating that they will pay at least Php3.1 billion less per year starting 2018. (From Buwis(et!): DOF’s Top Five Tax Reform Lies, www.ibon.org)
In a rally in at the House of Representatives various sectors led by the BAYAN and the Makabayan Coalition called for the rejection of the bills that would restore the death penalty and another that imposes higher taxes on the people. Both bills are government-sponsored.
Evan Hernandez of the rights group Hustisya said that under a justice system that is flawed if not downright rotten, death penalty is not a deterrent to crimes nor will it render justice to the victims.
Like the death penalty, the tax reform only hits the the poor rather than the rich said Rep. Carlos Zarate of Bayan Muna. Zarate and other members of the Makabayan bloc vowed to oppose the bill and will instead push the Finance Dept. and the Bureau of Customs to efficiently work on their collection. (Video by Divine C. Miranda) Read more