PREPARING FOR DOMINO EFFECT: DBM apportions P28.8B to offset TRAIN Inflation

The Department of Budget and Management allocated P28.8 billion to ease the direct effect to the market goods of the Tax Reform for Acceleration and Inclusion Act (TRAIN) and to offset the expected increase in consumer prices that was already incorporated by the government.

“We laud the passage of Package 1A of TRAIN insofar as it supports the administration’s socio-economic agenda. It will raise the necessary revenues for our much-needed Build Build Build program and social services initiatives,” Diokno said.

The reason for offset is for the passage of TRAIN as well as the Tax Reform Cash Transfer Project, loan facility for the public utility vehicle (PUV) modernization program, and the National ID System.

“Nevertheless, we are aware of the short-term and transitory effects of TRAIN on consumer prices, which is why the government incorporated these mitigating measures in the 2018 budget,” the DBM chief added.

There are unconditional cash grants to the poorest 50 percent households identified by the Department of Social and Welfare Development and DBM has decided to set aside P24.5 Billion for it. The budget will be kept in the Land Bank of the Philippines.

“The unconditional cash grants will more than offset the short-term inflationary impact of TRAIN. This is in response to critics who say that TRAIN is anti-poor because the informal sector and already tax-exempt wage earners will be faced with higher excise taxes,” Diokno said.

This program allotted P200 to be given to over 10 million Filipino households a month this year. In 2019 and 2020, this will increase to P300 per month per household.

DBM also allocated P2.3 billion for the loan facility to be extended for PUV drivers for the replacement of the old jeepneys with safer, comfortable and economic PUVs in which the fund is from the Land Bank and Development Bank of the Philippines while its use will be subject to the guidelines of the Department of Transportation (DOTr).

P2 billion has also been earmarked for the implementation of the National ID system which the Senate aims to pass early this year.

The proposed scheme would enhance the delivery of basic services in the Philippines, as well as prevent crimes and expedite transactions in the private sectors.

"Ang increase ng inflation rate will be 1% in this point. For example, 3%, will become 4%" National Economic Development Authority Secretary and Director-General Ernesto Pernia said.

However, this increase will be countered by the lowering of rice prices brought by the removal of quantitative restrictions on rice imports.

DBM mentioned this would lower the inflation by 1.14 percent annually.

"In the long-term, TRAIN should even lead to lower prices as it will result to better productivity and lower transportation costs with superior infrastructure," Diokno insisted.

#DBM #TRAINLaw