Duterte’s economic team warns: Suspending TRAIN law ‘will stifle our growth’

by Ian Nicolas Cigaral (philstar.com), Jun 5, 2018

MANILA, Philippines — President Rodrigo Duterte’s economic team on Tuesday warned against freezing the implementation of the tax reform law, saying such a move could stunt the Philippine economy’s growth amid strong calls to suspend the law that has been partly blamed for rising consumer prices.

The Tax Reform for Acceleration and Inclusion Act—which lowers personal income taxes while raising excise levies on fuel and “sin” products, among others—has been pushing up prices of key consumer items in recent months.

Some legislators say Congress might “suspend” the TRAIN act if inflation blows past targets, despite the law’s tax-freeze provision that will kick in when global oil prices hit a certain threshold.

In a joint statement, the country’s economic managers stressed that the TRAIN law is “vital” for the government’s ambitious infrastructure plan which, in turn, could supercharge economic growth.

“Suspending TRAIN and adopting other band-aid solutions will only have a minimal and short-term impact on inflation and will stifle our growth, further delaying our nation’s progress toward becoming an upper-middle-income country by 2019, such that around six million Filipinos would be lifted out of poverty by 2022,” they said.

“We remain committed to doing all we can to invest in our people, and build safer communities and better infrastructure so that everybody will prosper,” they added.

The hugely popular Duterte had thrown his weight behind the TRAIN law.

But the tax reform law had also triggered rare public disapproval of the administration amid accelerating inflation, which hit a fresh five-year high of 4.6 percent in May.

International debt watcher S&P Global Ratings recently raised its outlook for the Philippine economy to “positive” from “stable,” saying the country’s ratings could be bumped up if the government’s fiscal reform program leads to “further achievements” in the next two years.

Meanwhile, the DOF earlier said the Philippines is expected to bag rating upgrades soon due to the implementation of the TRAIN law.

“The Philippines is already on the path of high and sustained growth. We must stay the course,” Duterte’s economic team said.