Tax reforms to lead to higher prices of prime commodities?

RG Cruz, ABS-CBN News

Posted at May 19 2017 05:06 PM

MANILA – Advocates of the government’s tax reform program are wrong in saying that it will not lead to huge jumps in the prices of prime commodities, a left-leaning lawmaker said Friday.

One example, said Bayan Muna Rep. Carlos Isagani Zarate in a statement, is the price of liquefied petroleum gas (LPG), commonly used for cooking.

"Sa LPG pa lang ay ang laki na ng itataas nito. Sa House BIll 5636, tataasan ng P3 excise tax ang kada litro ng LPG pagpasok ng 2018. Dadagdagan pa ng P2 sa 2019, at P1 pa sa 2020," he said.

This means that in 2018, the price of a 1.96-liter tank of LPG can rise by about P64.68, and more the next year, possibly leading to an increase in the price of food in restaurants and eateries.

Earlier this week, Albay Rep. Joey Salceda, senior vice chair of the House ways and means committee, claimed that the bill's inflationary effect would be minimal. 

The bill reduces personal income taxes but removes most of the exemptions to the value-added tax, and imposes higher and new fuel excise taxes, and taxes on sugar and sugar sweetened beverages, among others.

Salceda said the proposal aligns Philippine personal income tax rates with its regional neighbors.

Data from the Department of Finance show that the inflationary effect on food will be at 0.9 percent, transportation at 2.8 percent, electricity at 0.7 percent, and 0.6 percent for others.