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Ecop cautions vs further fuel excise tax hike

/ 04:49 PM September 11, 2018

The employer’s group in the country said the government should consider suspending the scheduled increases in fuel excise tax, noting that it should at least act on factors that it can control to curb inflation.

In a statement, the Employers Confederation of the Philippines (Ecop) said the government should keep from further implementing fuel tax hikes under Train law, the first tax reform package of the Duterte administration.

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While the package lowered the personal income tax of millions of Filipinos, it increased consumption taxes such as on fuel, which have partly contributed to the spike in prices of basic goods and services.

“While oil price movements in the international market are beyond the control of our policy makers, there are a number of actions that can be immediately put in place to curb inflation and help not only employers but most specially the less fortunate where the brunt of higher prices are felt the most,” Ecop said.

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“While it would be difficult and unproductive to reverse TRAIN 1 and delay the implementation of TRAIN 2, the government can consider suspending any further automatic increases in taxes on petroleum products in the coming years, as originally proposed,” the group added.

This is the first time that the group made such an appeal, as it cited ways the country might react — both good and bad — to address inflation, which reached a 9-year high in August.

Ecop said the central bank might be increasing interest rates soon, which will “only escalate borrowing costs further.”

Moreover, the labor sector might file for a petition to increase the minimum wage, “which business could hardly afford at this time where costs pressures weigh heavily on its operations and eventual viability. “

“Given all these and the seeming endless distractions and noises from the political front, there is really a basis for concern among employers and investors alike,” the group said.

Lawmakers are currently pushing to suspend the scheduled increases under the Train law. From 2018 to 2020, fuel excise tax will keep increasing as scheduled, despite the protests of labor groups and some lawmakers who have called the policy as anti-poor.

Ecop said that the suspension will temper any further increase in the costs of transport and power. Most importantly, the group said it will “rein in inflation expectations.”

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The group also called the problem on rice, which is one of the critical factors behind inflation growth, is a “purely supply and logistics issue.” Thus, Ecop called on the National Food Authority (NFA) to “get its act together.”

The country’s inflation hit an over nine-year high of 6.4% in August.

“The NFA and the NFA Council need to get its act together immediately if only to restore an adequate supply nationwide, inclusive of buffer stocks free from bukbok,” Ecop said.

“This will alleviate for now the inflation expectation and ease demand pull pressures for this commodity. In the near term, government must seriously address the effectiveness of NFA in fulfilling its mandate and decide firmly and soonest on the rice tariffication bill,” the group added.  /kga

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