Tax reform to trigger price shock, warns Zarate

Bayan Muna Rep. Carlos Zarate. (Photo from the Facebook account of Bayan Muna)

The tax reform bill President Duterte will soon sign into law will trigger a “price shock” against consumers, Bayan Muna Rep. Carlos Isagani Zarate said on Monday.

In a statement, Zarate cited the lack of protection for consumers as the Tax Reform for Acceleration and Inclusion (TRAIN) bill is set to raise taxes on consumer goods to offset the lowering of income taxes.

“The contents of the bill itself are highly contentious and gravely anti-people. Once implemented, this TRAIN will trigger a price shock against consumers with the spike of prices of oil, power, sugary beverages and other products,” he said. “This TRAIN is full of additional burden to consumers but clearly wanting with measures to protect them.”

Zarate said that electricity costs would increase by P0.04 to P0.08 per kilowatt-hour.

“With this, the tax reform bill should at least have a provision to cushion the adverse impact to consumers of these added tax on fuel, to require all distributions utilities to subject to truly competitive bidding the supply contracts for power,” he said.

The bill would impose a tax of P2.50 per liter on diesel, P1 per liter on liquefied petroleum gas and P7 per liter on regular gasoline in 2018, which would be gradually increased to P6, P3 and P10 by 2020. The excise tax on coal would be P50 per metric ton in 2018 and P150 by 2020.

It would also impose a tax of P6 per liter on drinks using artificial sweeteners and P12 per liter on drinks using high-fructose corn syrup, with milk, instant coffee and natural juice listed as exemptions.

This “package 1” of tax reforms is expected to generate P130 billion. Lawmakers plan to look into the repeal of various tax incentives for “package 2” in 2018.