Senator Sherwin Gatchalian, who chairs the Senate Committee on Economic Affairs questioned the administration’s economic advisers on why they failed to fully inform the senate about the impact of the Tax Reform for Acceleration and Inclusion (TRAIN) Law on inflation.
In a senate hearing, Gatchalian said that the Department of Finance (DOF), Bangko Sentral ng Pilipinas (BSP), and National Economic Development Authority (NEDA) were not able to forecast that the inflation rate would breach the 2-4 percent target range.
In response to Gatchalian, Finance Undersecretary Gil Beltran told the committee that inflation was triggered by prices of tobacco, as well as oil in global markets.
“The main impact was triggered by higher global prices of oil, from $50 per barrel last year to $70 per barrel this year. We did not expect that tobacco prices would rise to 40 percent, we did not expect the better implementation of sin tax would cause inflation on tobacco prices.” – Gil Beltran, Undersecretary, Department of Finance
Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo meanwhile said global oil prices rose because members and non-members of the Organization of Petroleum Exporting Countries (OPEC) decided to cut their oil output.
the central bank official also noted that the artificial shortage of NFA rice contributed to the inflation as well.
Because of this, Senator Paolo “Bam” Aquino IV said that he will file a bill that will suspend the excise tax.
Gatchalian, however believes that it is still too early to suspend the excise, stressing the need for more time to re-evaluate.