CONSUMER GROUP FEARS INFLATION ABOVE 4% IN 2019

2019-01-09 02:29:03

Dimagiba cited a passage in the book of the late Chief Justice Enrique M. Fernando on equitable and progressive tax law  and quote “The effect on the cost of living  is easily apparent , and even the necessities of life could be placed beyond the reach of the poor . (The Constitution of the Philippines, 2nd edition, Enrique M. Fernando, p 221, 1977 ) .” 


(Dimagiba  added that the new Congress in June 2019 should revisit the Train law and introduce  an “equitable and progressive tax reform policy) .


Laban Konsyumer Inc. and its President Atty. Victorio Mario A. Dimagiba  expressed concern that the  2018 national inflation rose 75.8%  versus 2017 , while core inflation rose  113% ,  and blames the continuing implementation of the excise taxes  on fuels as the  principal driver of high inflation. LKI fears  that  the inflation for 2019 shall remain  high and above the target of 4% . 


Dimagiba maintains  that  crude oil prices was not the main driver of high inflation in 2018 . Just as  crude oil prices  went high quickly  in the 3rd quarter of 2018 ,  crude oil prices went down as fast in the 4th quarter, yet inflation had remained high and above the government target .  Dimagiba said the December 2018 inflation could have been lower than 5.1% but did not because of the excise taxes .  


Dimagiba  vows to pursue the pending  petition in the Supreme Court against the law. 


Dimagiba reiterated that the Train law   imposed an excise tax in  a fixed amount per liter of fuel , irrespective of the value of the crude oil , that increases  over a period of  three (3) years for everybody. The law  did not consider the ability to pay of the consumers ( equitable )  and that  the excise taxes imposed by the law    did not   depend  on the resources of the consumers affected (progressive ).  


Using the Department of Energy  common or prevailing prices as of December 2017, LKI cited  the big  impact of the excise taxes in percentage  on a per liter of gasoline, diesel and kerosene , over the period 2018-2020 , exclusive of the 12 %Value Added Tax ( VAT ) and irrespective of the actual amount of retail prices of the fuels, as follows


 

Fuel  
Dec. 2017
201820192020


Excise Tax /%
Excise Tax /%
Excise Tax /%
Gas
47.36/L
7.00 /14%
9.00/19 %
10.00/21%
Diesel
36.35/L
2.50/6.8%
4.50/12.3%
6.00/16.5%
Kerosene
41.09/L
3.00/7.3%
4.00/9.7%
5.00/12.1%


Dimagiba added that for every layer of the supply chain, which could be anywhere from 5 to 7 layers  as well as in the production , manufacturing and transportation of the  basic necessities and prime commodities, these fixed taxes are passed on to the costs of the goods and services produced and sold  at least 5 to  7 times. Except for rice , power ( could be much lower without the Feed in Tariff Allowance or FIT ALL which now stands at Php 0.2563/kwh )  and the one  (1) peso jeepney fare rollack,  there had been no rollback or reduction in the suggested retail  prices of basic necessities and prime commodities  . The announcement on the rollback of bread prices was hardly implemented and that  chicken, pork and sugar had remained without suggested retail prices. 


Dimagiba noted that crude oil in November 2018  was 65 USD per barrel and yet inflation was at 6%, but crude oil was 61 USD in December 2017 and inflation was only 2.9 %.


Dimagiba added that Laban Konsyumer Inc. had supported all the programs and activities in the reduction of prices of basic necessities and prime commodities. 

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