Wenceslao: Defending Train

RAMON Lopez, the secretary of the Department of Trade and Industry (DTI) has been going around town spreading the supposed virtues of the Tax Reform for Acceleration and Inclusion (Train). His latest claim was a bit amusing but what can we do? He said manufacturers won’t hike the prices of their products because of the imposition of excise tax on fuel.

“All of the manufacturers such as San Miguel CDO, URC (Universal Robina Corp.) Century (Pacific Foods) at saka ‘yung Nestle nagsabi sila sa akin mismo last Monday na hindi sila mag-i-increase ng presyo due to higher excise tax on fuel,” he said on GMA News Online.

It’s not only Lopez who is trying to downplay the effects of Train on the prices of basic commodities. Other government functionaries have gone all-out in assuring the people that, for example, minimum fare in passenger jeepneys won’t increase—yet. And that if the prices of basic goods do rise, there is the government subsidy for the poorest of the poor to tide them over.

But for how long can the government find ways to repress the prices before these burst on their faces? Government can give subsidies to drivers of public utility vehicles so they won’t have a reason to demand for a fare hike, but for how long will that subsidy be given? As for the manufacturers of basic commodities that supposedly promised not to hike the prices of their products, who are they fooling?

Consider that what we are experiencing this year is but the Package 1 of Train. Congress has already been urged to pass this year Package 2 and possibly for next year Package 3. To weaken resistance to the Pagkage 2 imposition, government is saying part of the revenues of the next tax imposition would fund the increase in teachers’ salaries. For Package 1, the sugar-coating was less income taxes.

To Lopez and the other government functionaries who peddle the virtues of Train, I am restating what I have written before. For all the supposed benefits from Train, like less income tax and subsidies to the poor, the fact remains that the intention of the imposition is to fund the government’s Build, Build, Build program that seeks to construct infrastructure costing billions of pesos. It is, first and foremost, intended to increase government revenues.

The tens of billions of pesos needed for the Build, Build, Build program is why old tax impositions are being raised and new tax impositions are being conceived. Government wants to take from the people the money they intend to fund the program. The tax impositions need to be higher than the cut in income taxes and subsidies to the poor in order for the government to get the revenues it wants.

It’s as simple as that.

Unfortunately for government officials who think that the harsh effects of the tax impositions can be eased by subsidies and warnings, the reality is that the movement of the economy has its own set of laws that government cannot repeal. They can initially hold off the harsh effects of the tax impositions surely, silently and inexorably, it would bedevil the people. Then this: history has taught us that additional tax burdens often spark unrest.
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