Hike in coal tax should not affect prices of basic goods, says DTI

The excise tax on coal would have a direct impact on the price of cement, but should have no effect on the prices of basic goods and commodities even if the tax would affect the cost of electricity, a key trade official said.

Trade Undersecretary for consumer protection Ruth Castelo said this was because, compared to other commodities, cement was heavily dependent on coal, which would now be slapped with higher excise taxes.

“For other commodities, it’s (coal) part of operating expenses as indirect costs. Thus, it is excluded in the computation of the product cost,” she told the Inquirer in a text message.

Data from the Department of Trade and Industry (DTI) showed that only cement would have a price increase exceeding P1 per bag.

A 40-kilogram bag of cement currently has a suggested retail price (SRP) of P205. The excise taxes would increase the SRP by P1.57 to P206.57, the data showed.

Because of a DTI policy that allows manufacturers the freedom to set the SRPs, the increase could be bigger.
However, Trade Secretary Ramon Lopez said the price increase should be “justifiable.”

In spite of concerns raised by industry groups, the TRAIN law was enacted late last year. It lowered the personal income tax of many Filipinos but increased consumption taxes on cars, coal, fuel, sweetened beverages, among others.

In the case of coal, the TRAIN law raised the excise tax from P10 to P50 per ton this year. This would increase to P100 per ton next year and to P150 per ton in 2020.

The DTI official’s statement was made to allay fears of the public that that the various excise taxes introduced by TRAIN would cause big increases in the prices of basic goods and commodities.

Upon making the necessary computations, DTI officials said that apart from directly affected commodities such as cars and sweetened beverages, the effect on other goods should be minimal.

This is because the excise taxes would only have a small impact on the distribution costs of companies, the latter accounting for less than 5 percent of the overall production cost, Lopez said in a previous interview.