By:
Ronnel W. Domingo and Doris Dumlao-Abadilla - 07:05 AM January 06, 2018
Power prices may not
increase before the summer months, but economists have warned that consumers
should be ready for faster rate of increases in prices within the first
quarter.
Energy Undersecretary
Felix William Fuentebella said electricity prices would likely remain stable
until the summer months because power firms usually maintained coal stocks good
for at least a month.
“We are still assessing
the effect on electricity which we expect to be felt starting March or April,”
Fuentebella said, adding that fuel-fired power plants may increase prices
sooner because they were only required to maintain stocks of 15 days.
As for fuel used by
motorists, the Department of Energy (DOE) has released guidelines for oil
companies to help the government monitor and implement the Tax Reform for
Acceleration and Inclusion (TRAIN) Act.
Oil price watch
Oil firms have been
asked to submit inventory reports as of Dec. 31 as well as a daily summary of
withdrawal from such stock starting Jan. 1 until it has been used up.
“Implementation of the
excise tax under TRAIN shall not be applied unless the (Dec. 31) stocks of
finished products are fully exhausted,” the DOE said.
Energy Secretary
Alfonso Cusi warned oil companies that the new tax law also imposed penalties
on violators.
“We remind the
consumers and the oil industry participants that violators face the sanctions
under the law,” Cusi said in a statement.
Faster inflation
But economists said the
new taxes would certainly cause faster increases in consumer prices this year,
possibly peaking in June and July, before edging down again later in the year.
“The country’s inflation rate may pick up to
3.5-4 percent this year from 3.2 percent last year,” said University of Asia
and the Pacific (UA&P) economist Victor Abola.
“Around 0.6 percentage
of the projected inflation rate for 2018,” Abola said, could be attributed to
the new taxes.
Standard Chartered
economist for Asia, Chidu Narayanan, for his part, also sees inflation in the
Philippines averaging at 3.5 percent.
“We estimate higher
infrastructure investment and the tax reform to add about 0.3-0.5 percentage
points to headline inflation,” Narayanan said.
Narayanan expects
inflation to edge up in 2018, boosted by domestic demand and the tax reform,
peaking in June-July, before coming down again.
“We retain our view
that inflation is not a worry for the Philippines,” he said. “We see inflation
averaging only 3.5 percent year-on-year in 2018.”
Still within target
Still, these inflation
projections are within the Bangko Sentral ng Pilipinas’ (BSP) inflation target
range of 2-4 percent.
On Friday, it was
reported that December inflation stood at 3.3 percent year-on-year, or in line
with expectations.
But UA&P’s Abola
said the impact of higher inflation on 40 percent of the country’s poorest
households would likely be curbed by additional subsidies or conditional cash
transfers.
He said these subsidies
should offset the adverse impact of higher value-added tax (VAT) on fuel and
removal of some exemptions.
For instance, Abola
said jeepney drivers could receive such subsidies to cover the additional cost
of higher petroleum products.
“I think that’s the way
it’s been structured. Of course we have to see how it actually works out, but I
think it’s very well thought [out],” Abola said.
To minimize the impact
of higher prices on basic goods, the government plans to use 30 percent of
additional revenues to increase the beneficiaries of its conditional cash
transfers from four million families to 10 million families.
But economist Harvey
Niere of the Mindanao State University argued the new taxes would only worsen
the “income inequality” between the rich and the poor because of higher
consumption taxes.
The TRAIN law reduces
personal income taxes but imposes new or increased excise taxes.
“The poor will not
benefit from lower income tax rate because they are exempted from paying income
tax, to begin with,” Niere said.
Niere branded the TRAIN
law as an “antipoor program,” particularly the law’s uniform implementation of
consumption tax both for rich and the poor. —WITH REPORTS FROM MART SAMBALUD
AND ALLAN NAWAL
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