Solon, union warn consumers of price shock from new tax law

Bayan Muna Partylist Representative Carlos Zarate (CDN PHOTO/CHOY ROMANO)

Consumers will suffer a “price shock” triggered by the tax reform bill that President Duterte is expected to sign into law this week, Bayan Muna Rep. Carlos Isagani Zarate said on Monday.

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

“Once implemented, this TRAIN will trigger a price shock against consumers with the spike in prices of oil, power, sugary beverages and other products,” he said in a statement.

Informal workers

Among those to be adversely affected are 15.6 million informal workers, according to a labor group.

The Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP) said informal workers would bear the rising cost of services because of excise taxes on fuel, coal and sweetened beverages.

ALU-TUCP spokesperson Alan Tanjusay said TRAIN, instead of providing relief, would run over informal sector workers and cause other forms of poverty.

“Getting no direct benefits from the tax reform package, these underground economy workers will fall further way below the poverty line,” Tanjusay said in a statement.

Electricity costs

Zarate said electricity costs would increase by 4 centavos to 8 centavos per kilowatt-hour.

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

The TRAIN 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. These would be gradually increased to P6, P3 and P10, respectively, by 2020.

The excise tax on coal is P50 per metric ton in 2018 and P150 by 2020.

Artificial sweeteners

The measure 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.

The ALU-TUCP noted that TRAIN had no policy, programs or safety nets for informal economy workers.

“We urge [the] government to improve its social safety net protection to underground economy workers to save them further from falling deep into extreme poverty. This is the only way we can protect them,” Tanjusay said.

Informal economy workers are defined as independent, self-employed, small-scale producers, and distributors of goods and services.

The category include jeepney, tricycle, pedicab and taxi drivers, vendors, sales attendants, barbers, cooks, waiters, dishwashers in carinderias and canteens, tailors, sewers and porters.

Informal economy workers are not covered by labor laws and standards, and have no Social Security System, PhilHealth and Pag-Ibig Fund coverage. —VINCE F. NONATO AND JULIE M. AURELIO