Solon warns of uprising as tax law imposes additional fuel costs, raising prices of basic goods

Sen. Panfilo Lacson (

By Daniel Llanto | FilAm Star Correspondent

In an I-told-you-so stance about his earlier vote against the Tax Reform for Acceleration and Inclusion (TRAIN) law, Sen. Panfilo Lacson warned of a people’s uprising against the skyrocketing prices of goods brought by this law that put food beyond many people’s reach.

“When the stomach protests, prepare for revolution,” said Lacson, noting how a scenario of such food crisis triggered civil wars in Latin American countries and even in the Philippines in the past.

Lacson said it is always a different story when the people’s stomachs begin complaining.

“Let us not wait for things to go badly.”

He urged the government to do something to arrest the rise in prices of almost everything. The Senator said that while he was not encouraging protests, “it’s a fact of life.”

Lacson said he had predicted the inflationary effect of the TRAIN law in the course of opposing the measure. The tax law was passed last year and took effect on January 1. “I don’t regret voting against the measure,” he said.

He recalled that he advised the Department of Finance (DoF) last year against raising the excise on fuel under the TRAIN law and instead review 143 exemptions to the 12-percent value-added tax (VAT).

Lacson pointed to Malaysia’s six percent VAT with only 14 exemptions and Thailand’s seven percent VAT with just 25 exemptions. He said eliminating many of the VAT exemptions could have generated an additional PHP 117 billion revenue per year for the country.

He said the problem is that his proposal would deprive “privileged” industry sectors such as eco-zones, power, housing and cooperatives “where some of my colleagues had stakes.”

Lacson repeated his proposal to remove several VAT exemptions and said he would consult with finance officials for a bill with that objective. On suspending the collection of increased excise on fuel, the Senator said the problem would be how to fill the revenue gap that such a move would create.

“The problem there is revenue erosion,” he said. “Where will you find the revenue to compensate for it? We need to study it so it is holistic.”

“It is easy to call for the suspension of excise on fuel. That is not only popular, it’s an easy solution but how will you fill the shortfall?” he said.

In the House of Representatives, the chair of the powerful ways and means committee expressed willingness to discuss proposals to suspend the collection of additional excise on fuel but not the enforcement of the entire TRAIN law.

“What we do not want is to hastily stop the TRAIN law,” Quirino Rep. Dakila Carlo Cua said in a radio interview. Cua said stopping the whole TRAIN law would not be beneficial to the people.

But he added that it should be proven first that additional excise on fuel really caused a “huge pressure for prices to increase.”

Cua echoed the government economic managers’ claim that only 0.4 percent of the 4.5-percent inflation rate in April was due to the TRAIN law’s effects. He said “the government would lose double” if the reduction of income taxes continued but the collection of increased excise on fuel and other goods stopped.

The TRAIN law, which overhauled the income tax system and increased the ceiling for tax-exempt salaries, imposed a new PHP 3 tax for every liter of kerosene, PHP 2.50 for every liter of diesel and bunker fuel, and PHP 1 for every kilogram of liquefied petroleum gas (LPG).

Tax rates on kerosene, diesel, bunker fuel and LPG would be further adjusted to PHP 4, PHP 4.50 and PHP 2 in 2019 and PHP 5, PHP 6 and PHP 3 in 2020.

The TRAIN law also imposed tax rates of PHP 7 per liter of unleaded premium gasoline, naphtha, regular gasoline and pyrolysis gasoline.

The effects of the TRAIN law on consumer prices coincided with the steady increase of crude oil prices in the world market.