Photo from Jhay Jalbuna/THEPHILBIZNEWS
Despite of the approval of (TRABAHO) “Tax Reform for Attracting Better and High-qualityOpportunities” bill or House Bill No. 8083 by House of Representatives yesterday, Employers remain anxious of the rising inflation in the country, the highest after almost 10 years when in March 2009 with a record of 6.6%.
While the TRABAHO bill will cut the CIT by 20% gradually from the current 30% in order to lure investments by putting the rate at par with much of Southeast Asia, the price of commodities continue to skyrocket and this what prompted the Employers Confederation of the Philippines (ECOP) in recommending the suspension of the excise tax on oil to temper the cost of transport and power.
In a statement, the Employers Confederation of the Philippines (ECOP) expressed their concern over inflation’s shooting up to 6.4 percent in August. The group said it is alarming that the Philippines now has the highest inflation rate in Southeast Asia.
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“The inflation is now at 4.8 percent, well above the BSP [Bangko Sentral ng Pilipinas] target of between 2 percent and 4 percent for 2018. Among countries in Southeast Asia, we have the highest inflation rate in the region,” the statement read.
ECOP added, “It is expected that the BSP will again increase interest rates during its September meeting, perhaps by as much as 50 basis points. This will only escalate borrowing costs further,”
Employers also expect transport and power costs to go up, as global oil prices remain high. The deterioration of the peso, on the other hand, could only compound the cost problems of employers even more.”
But what worries the employers most is the demand of the labor sector to inflation, which is to file petitions for an increase in minimum wage.
The statement explained, “There is anxiety on the part of business that wage boards might even grant an excessive salary hike to show compassion to labor and shift the burden to employers. Granting such a petition will hurt the very engine that fuels economic growth in this country and will not help the more than 2 million jobless, the self-employed and the underemployed.”
They also added, “Business, too, is equally affected by the inflation arising from the high cost of production, and the wage boards must be cautioned in granting such a non-correctible salary hike. Given all these and the seeming endless distractions and noises from the political front, there is really a basis for concern among employers and investors alike.”
The ECOP pointed out that the government can enact non-monetary measures to curb inflation. The surging price of rice, for one, is a supply and logistics issue, it pointed out. They said, “Rice import restrictions have caused the price of rice over the years to remain high. Equally disturbing is that the supply, and eventually the price, of this commodity are also affected by the smuggling operation in the south.”
To address the rice issue, ECOP told the National Food Authority nd the NFA Council “should get its act together immediately” to restore a stable and free from weevil supply of the staple nationwide.
On its last note, the ECOP wants the government to suspend excise tax on petroleum products in the next two years. The Tax Reform for Acceleration and Inclusion (TRAIN) law imposed petrol excise tax of up to P6 over the next three years: P1 this year, P2 next year and P3 in 2020.
In closing statement ECOP said, “While it would be difficult and unproductive to reverse TRAIN and delay the implementation of TRAIN 2, the government can consider suspending any further automatic increases in taxes on petroleum products in the coming years, as originally proposed, according to Ecop. “This will temper further increases in the cost of transport and power and most importantly, rein in inflation expectations.”