Everyone can join the TRAIN (1)

The problem isn’t the train or its driver; it’s some of the passengers: unscrupulous businessmen taking advantage. The recently enacted first package of the TRAIN (Tax Reform for Acceleration and Inclusion) law was well thought out to provide the maximum benefits to the most people at the least cost.

The rich might suffer a bit, but they can afford it. And they wouldn’t get much sympathy if they complained. Members of the middle class will have little to complain about. Their higher take-home pay will more than cover whatever cost increases there will be (see “Tax reforms now,” Opinion, 4/6/17).

It is the poor, the unemployed, where the difficulty may lie. And it’s what I’d like to look at here. But before I do, let me tell the middle class that its problem won’t be what Package 1 of the TRAIN law has done, but what other people—the greedy opportunists—might do.

Let’s take the fuel that you put in your car, bus, or jeepney. The extra tax will raise gasoline prices by P2.97 per liter or P50.12 per liter now from P47.15 previously. Diesel prices will increase by P2.80 per liter to P40.19 per liter from the previous P37.39 per liter. Competition, the ethical behavior of the Big 3 oil firms, and effective government monitoring will ensure that prices don’t go beyond those figures.

The prices P40.19 and P47.15 are less than what you were paying back in 2007 and 2008, when world oil prices were double today’s and you were paying P43 per liter on diesel and P54 per liter on gasoline. And you could manage. Car owners now have more money in their pockets; they’ve got nothing to complain about. And the extra money will go to the construction of roads and bridges; when they’re completed, you will no longer idle for hours in traffic but speed to your destination. You’ll pay more per liter, but use fewer liters. You’ll save money. Surely that’s worth a mild sacrifice for a few years.

It’s those who ride buses and jeepneys who may have reason to complain. The government, particularly the Land Transportation Franchising and Regulatory Board, sets fares, and public utility vehicles must comply. I believe various transport groups have sought a fare hike and the LTFRB is reviewing their petitions. It said it would consult the National Economic and Development Authority on the petitions, but the increases should be small.

Vouchers for jeepneys may be given if the impact is proven to be too big. The budget for this is in the unprogrammed funds of the 2018 General Appropriations Act. The implementation guidelines will be handled by the Department of Transportation.

The poor rarely ride a bus or a jeepney (they have no job to get to). They walk or, in some instances, go by tricycle. Passengers’ ability to pay will constrain tricycle owners from raising fares to any degree.

As for food, the poor mainly eat rice, their staple. Rice is usually paired with “little else,” which is mostly fresh produce and processed food, which isn’t taxed. The government will also implement a tariff on rice to help bring down its price.

According to the Department of Trade and Industry, the increase in the prices of basic processed food such as instant noodles, canned sardines, or meat loaf under the TRAIN will be very small. The three items’ prices will rise by only 3 or 4 centavos. A 10-piece pack of pan de sal, a breakfast staple, will increase by only 6 centavos. Sachets of 3-in-1 coffee, another breakfast staple of many poor households and the source of sugar and energy of many, was exempted from higher excise taxes. The impact of higher oil prices on the coffee sachets is minimal, so no increase in price.

The price increase of other commodities such as corned beef, evaporated milk, condensed milk, and soap due to higher oil prices is also minimal, ranging from 4 to 8 centavos. The TRAIN also provides other safeguards for the marginalized, which I will discuss next week, along with the tax reform’s impact on the infrastructure development program.

What the government can do is widely publish, particularly on social media, what the prices should be so that the public can then report violators. The weakness of this idea is that Filipinos generally won’t complain, and won’t bring gouging to the DTI’s attention. But they could. (To be concluded)

E-mail: [email protected]. Read my previous columns: www.wallacebusinessforum.com.