Press Release
May 8, 2018

Sen. Ejercito bats for suspension of TRAIN law

SENATOR JV Ejercito has called on the government economic managers to suspend the Tax Reform for Acceleration and Inclusion (TRAIN) law currently being implemented to arrest the rising inflation rate.

Ejercito made the call after media reported that the headline inflation rate accelerated to 4.5 percent year-on-year in April, which was the fastest in more than 5 years. The full-year target is 2-4 percent.

"It might be wise to consider suspension of the TRAIN law if the trend continues to breach the inflation threshold," Ejercito said.

Ejercito was already alarmed when the March inflation rate reached 4.3 percent, from the revised 3.8 percent in February.

"The economic managers should seriously review the TRAIN law given the upward trend of the numbers. They should assess whether the increase in inflation is still manageable. Otherwise, implementation of TRAIN 1 should be suspended and re-studied," he said.

During the Senate deliberation of the TRAIN, both the Department of Finance and the National Economic Development Authority had claimed that the measure would likely raise the inflation level by (just) 0.7 percent this year.

The two agencies had even assured that the inflation rate would still be within the projected 2-4 percent target.

"Pero mukhang ang layo yata ng sinabi nila noon sa mga numero na lumalabas ngayon," Ejercito noted.

He added: "My worst nightmare about the TRAIN law has become a reality. I had warned this before that the TRAIN is inflationary in nature. The common people may not know what inflation is, and they don't care. What they do know and what they care about is that prices of food and other necessities have all gone up."

The idea of the tax reform was to decrease the personal income tax, giving the people more purchasing power.

However, he said, the rising prices of commodities would negate the positive impacts of TRAIN law on income.

Ejercito said that the negative effect of the higher inflation rate is more felt by the bottom 30% of Filipino households.

"Parang mas lalo yatang humirap ang kalagayan ng ating mga kababayan. The TRAIN law may be a tool to increase government revenue but does it go hand-in-hand with the government's anti-poverty efforts?" he said.

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