Tax reform 'unfairly blamed' for price spikes, Dominguez tells congressmen

Michelle Ong, ABS-CBN News

Posted at May 22 2018 11:54 AM

MANILA - The first tranche of tax reforms is being "unfairly blamed" for rising consumer prices, Finance Secretary Carlos Dominguez said Tuesday, as he defended the government's key economic measure before lawmakers.

Roughly two-thirds of the 4.5-percent inflation in April was due to the demands of a rapidly-expanding economy, Dominguez said.

New duties under the Tax Reform for Acceleration and Inclusion or TRAIN account for 0.4 point of the increase in consumer prices, lower than its estimate of 0.7 point, said Finance Usec. Karl Kendrick Chua.

The first package of reforms took effect last Jan. 1, imposing higher duties on fuel, cars, tobacco and sugar sweetened drinks. It also lowered personal income tax rates for the middle class.

"The success we have achieved for TRAIN 1, is encouraging, but we cannot and should not stop TRAIN from moving forward," Dominguez said.

Some lawmakers have called for the suspension of higher duties on fuel to help ease inflation pressures.

Dominguez said TRAIN was felt the most on tobacco and sugary drinks, but such duties are "punitive" to encourage healthier consumption.

Additional revenues from the reforms would help fund infrastructure and social protection programs, he said.