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Senate inquiry on inflation and Train Law

May 9, 2018
Sen. Win Gatchalian
Chair, Committee on Economic Affairs
Senate of the Philippines
Re: P.S. Res. No 696
On behalf of the Trustees and Members of Laban Consumer Inc., we express our sincere appreciation for the opportunity to be invited in this public hearing, in aid of legislation, on P.S. Res No. 696. Based on news report, another Resolution on the same subject matter was filed by Senator Bam Aquino.
Your Honors, in Laban Konsyumer Inc., our primary advocacy is to enable an informed consumers of their rights, responsibilities and obligations. In the matter of the Train Law or Republic Act No. 10963, our group has expressed its opposition over the unwanted increases in excise taxes on coal, diesel, LPG, bunker fuel, and kerosene, which form part of basic commodities, i. e. coal and bunker fuel for electricity and cement manufacturing, diesel for transportation and power, LPG for food and transportation, and kerosene for cooking. We issued a press statement in January 22, 2018 for the purpose and is uploaded under Konsyumer News in our website We said that there is no hiding the fact that the increases in excise taxes will hit low income and poor families the hardest.
We also prepared what we call Notes on the Train Act, impact on inflation and the poor consumers- as of May 4, 2018. It is likewise uploaded in our website.
On May 3, 2018, GMA News online reported that Secretary Pernia said at the sidelines of the ADB 51st Annual Governors , inflation in April exceeded the target and that oil prices have been going up and also the Train is ?..a culprit.
Your Honors, when the Expanded or Reformed Value Tax was raised from 10% to 12 % under Republic Act No. 9337 and broadened the taxable VAT base, some mitigating measures were introduced in the law. In the newsletter of the Philippine Institute of Development Studies, or PIDS, Economic Issue of the Day, Vol VI, No. 1, January 2006, it stated that ?mitigating measures were put in place to cushion the impact of broadening the taxable base of the VAT. Price increment in the price of petroleum products will be negated by a reduction of excise taxes on diesel, kerosene and bunker oil .Since diesel is widely used in transportation of passengers and cargo, the impact will be reduced. To reduce the impact on electricity, the 3% franchise tax on power distribution utilities was removed and also the franchise tax for air carriers. Consumer vigilance is therefore required to ensure that unscrupulous producers do not take advantage of probable confusion on the effect of the broadened VAT coverage to justify unreasonable increases in the price of basic commodities?.
At the beginning of the year, our group proposed for the designation of a Price Czar or a Price Action Officer, someone with no conflict of interest, who shall oversee, manage and be responsible for ensuring that there are no abuses in the supply chain, catch profiteering and file cases. At the start of the dwindling NFA rice of Php 27 and 32 a kilo in the retail market and prices of commercial slowly inching up, we also proposed for consideration the imposition of SRP on commercial rice. Both proposals remained press items. However, when the April inflation data was released, a public official was quoted in the news when he issued a stern warning on traders committing profiteering and threatening the filing of economic sabotage cases.
Your Honors, the Train Law removed the mitigating measures introduced in the Expanded Value Added Tax. Your Committee can champion on executive and legislative initiatives to learn from the sound economic policy when VAT coverage was broadened by Republic Act No. 9337 but exempted or removed excise taxes on fuel products. Based on the data of PSR Resolution on the January year on year inflation, the figures had exceeded the 0.73% point increase for food prices, 2.8 % point increase for transportation and electricity by 0. 7 %, figures submitted by the Department of Finance. Further, the Price Act, as amended is a very good law and was held a valid law by no less than the Court of Appeals. In the UNTV news Ito and Balita, we suggested to suspend the fuel excise taxes by amendment of the law or thru an executive action The consumers are feeling the pangs of high prices despite assistance to poor households in terms of social welfare and benefits programs, which are not adequate and at times delayed. Let us catch and file cases against profiteering.
Thank you very much.
Very truly yours,
Atty. Victorio Mario A. Dimagiba , AB. LLB. LLM