Groups say deferment of second tranche on fuel excise tax will not curb inflation

Press Release 

16 October 2018

Groups say deferment of second tranche on fuel excise tax will not curb inflation

As many welcome the recent order to defer the collection of the second tranche of oil excise taxes under the TRAIN Law, progressive groups insisted that the order has no effect on runaway inflation.

Bukluran ng Manggagawang Pilipino (BMP) and Partido Lakas ng Masa, claimed in a statement that the deferment order by President Rodrigo Duterte was “a flimsy attempt” to control the forseen impacts to be inflicted by the second round of excise tax collection yet it does not raise a finger to address the price shocks generated by the first tranche.

The groups argued that Duterte’s deferment order greatly differs from the actual suspension of the oil excise taxes. They said, it “merely acknowledged without admitting, much less act on” the excessive strain caused by the entire tax reform package on ordinary Filipino families.

The progressives also decried the continued inaction of the government to curb inflation as the implications of first tranche of the TRAIN Law remains in full effect.

Under the first tranche, excise taxes on diesel fuel are pegged at P2.50 per liter and P7.00 per liter for gasoline.

The administration merely deferred on the P4.50 excise tax increase for diesel and P9.00 for gasoline under the second tranche.

“The Duterte administration remains condemnable for remaining adamant to the pleas of majority of Filipinos living on intermitent incomes who have been adversely affected by overtaxation,” said Luke Espiritu, president of BMP.

“The sharp rise of self-rated poor families of latest SWS survey should speak volumes and requires the administration’s full attention and swift action. Deferring on the excise tax collection for 2019 has no effect on the economic crunch currently besetting the poor,” he added.

BMP says that besides the non-fulfillment of the promised benefits under the TRAIN Law, the administration has not made any effort to address the structural injustices inflicted on the poor.

“Not only are workers burdened with overtaxation but also suffering from failed policy reforms or the lack of it. Contractualization remains to be in full swing three years into Duterte’s term, the massive budget cuts on social services and with the inflation rates hitting 6.7% last month, purchasing power of workers have obviously weakened immensely”, Espiritu lamented.

Despite the economic managers’ denial of the TRAIN Law’s contribution to inflation, Sonny Melencio, chairperson of PLM urged them to go beyond their statistics and projections and admit that they overlooked the impact of the US-China trade wars, the rising prices of petroleum in the global market and the struggling foreign exchange rates that makes imports more expensive, all of which contribute to spiraling inflation.

Melencio called for the immediate scrapping of the TRAIN Law to address the budgetary contraints of Filipino familes before the yuletide season and that they may enjoy a reprieve from the taxes levied against them.

He also warned that, the deferment shall be proven ineffective and will only drive more people to the streets as price hikes will be inevitable in the next two months due to the increase of global petroleum prices.

“Not unless Duterte acts on this, the administration’s senatorial line up as well as their other allies in Congress shall reap a catastrophic protest vote from the impoversihed social classes, reminiscent of the 2016 national elections”, Melencio foretold.

BMP and PLM also announced that they will hold joint protests in the weeks to come to call for immediate price control side by side with their demands to end contractualization, an increase in the national budget for social services, a P750 national minimum wage and the scrapping of the oil deregulation law. ###