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Philippines: Amid rising inflation, Bam files bill seeking suspension of additional fuel tax
MANILA, Philippines — Sen. Paolo Benigno “Bam” Aquino IV on Thursday filed a bill allowing the suspension of additional petrol taxes under the government’s tax reform law should the three-month inflation average exceed official targets.
Under Senate Bill 1798, government agencies will be empowered to suspend the excise tax on fuel under the Tax Reform for Acceleration and Inclusion law if the average inflation rate surpasses the annual target range over a three-month period.
The Department of Finance will also be allowed to lift the suspension and re-impose the excise tax on fuel if the average inflation rate stabilizes and falls below the annual target for three consecutive months.
“With so many Filipinos living in the fringes, the government needs to play an active role in managing inflation and ensure that our countrymen can survive the rise in prices,” Aquino, who voted against the government’s tax reform law, said in his explanatory note on the bill.
“As such, the measure seeks to protect underprivileged Filipino families from increasing fuel prices, and its effects on the prices of goods and services,” the Liberal Party senator said.
Inflation in April shot up to 4.5 percent, the fastest in five years. This pushed the year-to-date inflation rate to 4.1 percent, above the 2 to 4 percent target range set by the Banko Sentral ng Pilipinas.
According to the International Monetary Fund, the country’s inflation will settle at 4.2 percent this year before easing to 3.8 percent in next year.
The TRAIN law came into effect on Jan. 1, 2018 as the government was looking for fresh funding sources to finance its ambitious infrastructure and social safety programs.
To do this, the law slashed income taxes and imposed higher levies on petrol and cigarettes, leading some to believe that it’s one of the major factors in the rising inflation rate.
According to Aquino, he put this safeguard in the Senate’s version of the TRAIN law to give the government tools to stave off rising inflation. This, unfortunately, according to the opposition lawmaker, was removed from the version approved by the Bicameral Conference Committee which reconciled the measures from the Senate and the House.
Aquino said that the challenge for the government right now was to strike a balance between its macroeconomic goals and providing relief and support to poor Filipinos.
Budget Secretary Benjamin Diokno meanwhile opposed proposals to suspend some aspects of the TRAIN law saying that doing so would do more harm than good.
“Suspending the law is to me out of the question. It has to be implemented,” he said on Wednesday, adding that this move could imperil the government’s revenue targets.
Source: https://www.philstar.com/business/2018/05/10/1813947/amid-rising-inflation-bam-files-bill-seeking-suspension-additional-fuel-tax#6kx7cYwcRjsardzU.99