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Haven’t we seen this before?

The yellow axes grinding against President Duterte which are the suspects behind the sudden disappearance of National Food Authority (NFA) rice in the market and may also be instigating the spike in the inflation rate that is being blamed on the showcase tax reform program called the Tax Reform for Acceleration and Inclusion (Train) law.
The combination of a shortage of rice and high commodity prices is an explosive mix for public unrest but which both are being proved fabricated, by what group still remains an unknown.
The yellow mob, although greatly depleted in terms of political base, still counts the biggest business groups in the country.
Also include the smugglers and the moneyed drug syndicates that are taking serious blows from the campaigns launched by Rody among those determined to take him down.
The inflation rate shot upwards to four percent in January, which was a three-year high and it is being attributed or blamed on the implementation of the Train law which featured an increase in excise taxes on some commodities.
An analysis made by the Department of Finance (DoF), however, disputed the claim of mostly critics of Rody that the higher prices is the backlash of the Train law.
Former World Bank economist Finance Undersecretary Karl Kendrick Chua said the inflation spike was the result of apparent “profiteering” and not due to the implementation of the new tax reform law.
Chua said certain retailers selling old stocks they procured before the Jan. 1 effectivity of the Train seemingly took advantage of this new law and imposed excessive price adjustments, which led to last month’s higher-than-expected inflation rate.
It would take a concerted effort to make the price increases reflect on the inflation rate and in a way that would be felt nationwide.
Prices are expected to normalize once the markets adjust and the government intensifies its monitoring campaign to check any unwarranted price movements of basic goods, Chua noted.
He, however, said that the campaign against tax evasion, particularly against Mighty cigarettes which was recently acquired by Japan Tobacco Inc. after the government assessed its former owner nearly P40 billion in back taxes that the previous administration failed to collect.
The Bureau of Internal Revenue (BIR) filed several criminal complaints before the Department of Justice (DoJ) against Mighty Corp. for its massive use of counterfeit tax stamps.
Chua said part of the increase in prices is the result of better compliance with the payment of excise taxes on “sin” products, with tobacco inflation recorded at 17.4 percent during the month even though the expected increase arising from the tax hike, through Train, for cigarettes was only eight percent.
With JTI now in control of Mighty, the company is now paying the correct amount of taxes, which in turn, would mean it is charging higher prices for its cigarettes to make up for the higher tax rate.
“If Mighty continued to evade tax and therefore cigarette prices remain low, overall inflation would have gone down to around 3.75 percent,” Chua said.
Chua also noted that the inflation rate in Metro Manila for January 2018 rose to 5.45 percent, while outside Metro Manila, where most of poor households reside, it was lower at 3.53 percent.
Finance Undersecretary Gil Beltran, who is the DoF’s chief economist, added the inflation spike in January was partly the result of the excessive price adjustments by traders to compensate for the excise tax hike on “sin” products such as cigarettes and alcoholic drinks.
Beltran said “the prices of sin products increased by 12.3 percent even as specific excises were adjusted by only four percent as the sin tax law provides.”
“While the price of rice has remained stable, that of other commodities such as non-alcoholic beverages which were affected by the tax on sugar-sweetened beverages (SSB) in the TRAIN Law and vegetables, by weather disturbances, increased,” Beltran said.
“Of the 4 percent inflation, 2.1 percentage points was accounted for by sin products and sugar-sweetened beverages,” Beltran added.
In the yellow ouster move against former President Joseph Estrada, the initial targets were the economic indicators.
The fact that both the rice shortage and the price increases were artificial may reveal some sinister yellow shadows moving in the background.

Last modified on Tuesday, 13 February 2018 19:38

2 comments

  • The Eye

    When the money currency is moving at a faster rate, dealers will naturally bump up their prices to have more profits. It is the way of supply and demand which equate to INFLATION. Critics of Duterte who are in business, don’t be a hypocrite. You too will be tempted jacking up your prices and may have already done so.

    The Eye Wednesday, 14 February 2018 12:08 Comment Link
  • Boy Hen

    The problem of the yellow ribbon is they have no rallying point all are unpopular and President Duterte is doing as much as he can that can benefit the people.

    Boy Hen Wednesday, 14 February 2018 08:20 Comment Link

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