TRAIN – Its effects on the Public

TRAIN (Tax Reform for Acceleration and Inclusion) or Republic Act 10963 was recently signed by President Rodrigo Duterte and has taken effect at the start of 2018. If media were to be the indicator, there has been no report of mass complaints on the effect of TRAIN. Although some people have taken to social media to air their concerns of TRAIN, they tend to jump to the conclusion it is not benefitting them at all.

One major concern is that TRAIN will affect the cost of goods, that prices will increase. The Department of Trade and Industry (DTI) is honest enough not to deny this. Prices will increase but it does not necessarily mean it will skyrocket. Furthermore, the increase is categorical and not general.

The root of this concern stems from the increase of excise tax on fuel products due to TRAIN. According to DTI Secretary Ramon Lopez, prices may increase but it would be minimal.

With regard to fuel prices, diesel fuel will have an excise tax of 2.50 PhP per liter while that of gasoline will be 7 Pesos. With that said, businesses should spend less than 5% of the cost to transport products. This is because the effect of higher excise tax on fuel products to the total production costs is 0.4%. Lopez added this is rather small and not excessive as everyone might think. Several have noticed an increase in fuel prices at gas stations. Some are starting to complain about it.

As to basic commodities, prices are expected to increase but incrementally. For instance, a loaf of bread priced at 35 Pesos may increase by .04 Centavos and instant noodles costing 7.30 Pesos may go up by .03 Centavos. But these are basic commodities people need on a daily basis. Prices of certain items like softdrinks and unhealthy products may increase a bit more.

Despite the increase, the DTI cautioned the public to be on the lookout for any abusive establishments that may advantage of TRAIN by imposing unusually high prices. Secretary Lopez said that establishments must price their products within the established suggested retail prices. The public is advised to report these unscrupulous dealers at the soonest. Such violators may be charged with profiteering.

As of the moment, prices have not yet increased because there are still adequate stocks in inventories as reported by the DTI before TRAIN took effect. So as long as they are still there, prices will not increase for now. Yet the DTI reminds businesses to increase prices with reason.

The DTI Hotline is (02) 751-3330 or visit its website to report abusive businesses.


Featured Image Source: Department of Finance

Aaron Ronquillo

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