TRAIN LAW JITTERS
Public wary of transport group’s plan to push for P6 fare hike, shocked over soft drinks’ price increase
High school teacher Arnel Cortes takes a jeepney from his home in Barangay Guizo, Mandaue City and then rides a tricyle to get to Labogon National High School where he has been teaching for six years.
The 29-year-old spends P43 every day as transportation fare. His monthly take-home pay is P4,000 after all his loan deductions from his monthly gross income of P23,000.
With the implementation of Republic Act 109631 or Tax Reform for Acceleration and Inclusion (Train) law, which increases excise tax on fuel, Cortes will have to set aside more money for his transportation fare.
Although it is not yet official, Cebu Integrated Transport Service Cooperative (Citrasco) Chairman Ryan Benjamin Yu said they are looking at a P6 increase on top of the current P6.50 minimum fare for public utility jeepneys (PUJs).
This means that the minimum fare could increase to P12.50 if this petition is pushed and approved by the Land Transportation Franchising and Regulatory Board (LTFRB).
“Kung dili lang magpaka buta bungol ang LTFRB, ma-approve gyud ni siya,” said Yu.
(If the LTFRB won’t turn a deaf ear and a blind eye on this, it will be approved).
Under the Train law, excise tax on regular unleaded and premium gas will be increased to P7 per liter this year, P9 per liter in 2019, and P10 per liter in 2020; diesel and bunker fuel will be taxed P2.50 per liter this year, P4.50 per liter in 2019, and P6 per liter in 2020; while petroleum gas shall be increased by P1 every year from 2018 to 2020.
Aside from fuel, the Train law will also increase excise tax on cars, tobacco, coal, oil products, cosmetic procedures and sweetened beverages.
The Train Law is said to be crucial to funding part of the Duterte administration’s “Build, Build, Build” program, the centerpiece infrastructure project of the government where it plans to spend from P8 trillion to P9 trillion between 2017 and 2022.
The first tax reform package to be implemented this month is expected to generate around P130 billion in revenues.
At a popular convenience store chain in Cebu, the price of a two-liter plastic bottle of soft drinks is now at P76 from its original price of P59.
The convenience store’s cashier said the increase was implemented yesterday as the company usually implements price changes every Wednesday.
At the office of the Department of Trade and Industry (DTI) Central Visayas, Regional Director Asteria Caberte explained that manufacturers of soft drinks have the liberty to increase the prices of their products as these are not covered by the suggested retail prices (SRPs) mandated by the DTI on basic commodities.
“(If it’s expensive), then don’t buy (these products). These are not essential products. We don’t have an SRP for that. They’re free to do that (increase their prices). But they risk losing their market share,” she told CDN.
BIR warning on profiteers
However, also, the Bureau of Internal Revenue (BIR), the Department of Trade and Industry (DTI) and the Department of Energy (DOE), in an Inquirer report, warned firms against taking advantage of the Train law by raising prices of affected goods even as old stocks remain and will be slapped with profiteering charges.
The warning came as the BIR has committed to finish this month the revenue regulations (RRs) that will guide the implementation of the various measures under the Train Act.
Internal Revenue Commissioner Caesar R. Dulay told reporters Wednesday that the BIR is currently working on the draft of RRs, which will presented for public consultations on Jan. 11-12.
The BIR last week already released the new withholding tax rates to guide employers in computing the income taxes of their workers.
Dulay said next in line will be guidelines on new or additional excise taxes, which will be retroactively applied as the Train went into effect on Jan. 1.
BIR Assistant Commissioner Marissa O. Cabreros said they want all RRs, which must also be ultimately approved by Finance Secretary Carlos G. Dominguez III before being implemented, to be out in January.
The BIR will issue RRs concerning income tax, withholding tax, value-added tax (VAT), excise tax on petroleum, excise tax on automobiles, excise tax on mineral products, excise tax on tobacco, excise tax on sweetened beverage, cosmetic procedures, estate and donor’s tax, percentage tax, and documentary stamp tax, the country’s biggest revenue agency said last week.
Also on Wednesday, energy officials said additional excise taxes on petroleum products should be reflected on pump prices no earlier than Jan. 16 considering that each oil firm is required to maintain a stock good for at least 15 days.
“We expect that any price increase due to the TRAIN program to be done 15 days after Jan. 1, at the earliest,” Energy Assistant Secretary Leonido Pulido III said in a press briefing.
In a statement, Energy Secretary Alfonso G. Cusi assured the public that the DOE was keeping a close watch over oil firms to prevent possible profiteering over the implementation of the Train.
In the case of soft drinks, BIR Deputy Commissioner Arnel Guballa said they will check inventories to see if old stocks were priced higher even as old tax rates apply.
Starting Jan. 1, sugary drinks including soft drinks are now also slapped excise tax besides the value-added tax on the commodity as well as income tax paid by the manufacturers and retailers.
Guballa noted that buffer stocks usually last for one to three months for various commodities, including sugar-sweetened drinks.
For its part, the DTI is considering to stop companies from raising the prices of sugar-sweetened beverages (SSBs) at least until the third week of January.
With new excise taxes in effect since Jan. 1, Trade Secretary Ramon Lopez clarified that the new rates should only be applied for new stocks of SSBs, noting that old stocks still qualify under the previous tax rules.
As of press time, he said that he is still asking beverage companies the number of days their current inventory would last in the hands of distributors and retailers. Citing his own experience, the former top official of food company RFM Corp. said that the stocks would last two weeks at a time.
Caberte also said some stores have not yet implemented the price increases because the stock they had were purchased last year when the higher excise tax was not yet implemented.
In a sari-sari store in Barangay San Vicente, Liloan, the price of a 1.5-liter soft drink bottle remains at P55.
Sari-sari store owner Marie Pepito said she bought her stocks last year so the prices are still at P55.
But her supplier already warned her that the price will increase between P20 to P25 per bottle.
In Barangay Casuntingan, Mandaue City, Vincent Paul Fontanoza, 24, said he would now think twice before consuming a bottle of soft drinks.
At his neighboring sari-sari store, Fontanoza found out that a 1.5-liter bottle is now sold at P70, P20 pesos more from its 2017 price of P55.
“Hilig gyud ko ug soft drinks. Pero karon, murag magduha-duha na kog palit kay mahal na gyud siya. Dako gyud siya’g increase,” he told Cebu Daily News.
(I like drinking soft drinks. But now, I think I’ll think twice before buying because it’s expensive now. There is a big increase in price.)
Under the Train law, sweetened beverages refer to non-alcoholic beverages of any constitution (liquid, powder or concentrate) that are prepackaged and sealed in accordance with the Food and Drug Administration (FDA) standards.
These beverages include sweetened juice drinks, sweetened tea, all carbonated beverages, flavored water, energy and sports drinks, other powdered drinks not classified as milk, juice, tea and coffee, cereal and grain beverages and other non-alcoholic beverages that contain added sugar.
The law imposes a P6 per liter tax on beverages using caloric and non-caloric sweeteners and P12 per liter on beverages using high fructose corn syrup.
According to BIR-13 Director Aynie Mandajoyan-Dizon, the agency is still waiting for the new law’s implementing rules and regulations to check on the procedural changes in the tax collection.
BIR 13 covers the revenue district offices of Mandaue City, Cebu City North and South, Talisay City, and Tagbilaran City in Bohol.
But as to the excise taxes of products such as sweetened beverages, Dizon said companies can immediately implement the changes as these already have computations based on the weight or volume of the product being taxed.
But Yu of Citrasco said a higher tax on fuel will directly impact drivers of public utility vehicles since fuel is an essential component of their daily operation.
With the increase in fuel prices, Yu said transport groups will file a petition for the minimum fare rate to increase.
“This will have a big impact on our drivers. The consequence of that is we will be asking for a fare increase for the PUJs once it has been implemented,” Yu said.
For now, he said the higher prices of petroleum products have not been implemented.
But as early as now, Yu said they are already starting to compute the possible fare hike petition they will be pushing for.
Citrasco has around 1,000 members who are PUJ drivers within Metro Cebu, and another 200 taxi units.
Transport network company Grab has already announced plans to also apply for a fare hike of around P10 to P13 with the expected higher operating expenses with the higher excise taxes on fuel as well as new cars. /With Inquirer report
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