Excise tax review put forward as inflation containment measure

By Beatriz Marie D. Cruz, Reporter

THE GOVERNMENT should consider a review of excise taxes on commodities to help ease inflation as legislated wage hikes loom.

“At this point, the businessmen are not passing on their costs to the consumer because business is not exactly very good,” Philippine Chamber of Commerce and Industry chairman George T. Barcelon said via telephone.

Mr. Barcelon called on the government to review the excise tax for key commodities like fuel and agricultural products, as rising food and transport costs fanned inflation to 3.8% in April.

“There should be a balance wherein all of these taxes can be looked into, and can be reduced, so that the end product given to the consumer will not increase so much,” he said.

Businesses in the Philippines face operating costs due to the need to sources materials from overseas, making it difficult to raise wages for their workers, according to Antonio A. Ligon, who teaches law and business at De La Salle University.

“The factors in the difficulty in implementing higher wages can be related to high cost of raw materials for manufacturing, particularly if it is imported — which is also brought about by the shrinking peso versus the dollar,” he said in a Viber message.

The regional wage boards have the authority to review and adjust wages based on each region’s economic conditions. However, workers have long claimed that wages have not kept up with the cost of living.

“Many employers will feel the difficulty, as a wage hike is diametrically opposed to the objective of profit-making. Many will comply but might resort to terminating workers,” Mr. Ligon said.

Supporters of a legislated wage hike said this would strengthen the purchasing power of workers, thus helping the economy grow.

However, the Employers Confederation of the Philippines (ECoP) said the costs passed on to the consumer post-wage hike will erode the value of the wage increase.

“Unfortunately, the increase in salary would only be spent on the increased prices (of goods),” ECoP President Sergio R. Ortiz-Luis, Jr. said via phone.

On Labor Day, President Ferdinand R. Marcos, Jr. called on the Regional Tripartite Wage and Productivity Board to review the prevailing minimum wages amid rising prices and rising inflation.

The National Economic and Development Authority (NEDA) warned against a legislated wage hike, noting that such move could fan inflation and hurt smaller firms.

“We are trying to temper inflation. And we don’t, at this point, want to add more sources of pain,” NEDA Secretary Arsenio M. Balisacan told reporters last week.

British Chamber of Commerce of the Philippines executive director and trustee Christopher James Nelson said the government’s push to ease the process of importing agricultural goods and impose harsher sanctions on agricultural smuggling will help ease upward pressure on commodity prices.

“I think those things have all got to work together and get recommendations from the regional board, and then obviously it makes it easier to then look at (a wage hike), because what you don’t want is for wage increases to be inflationary,” he said by phone.

Senate President Juan Miguel F. Zubiri earlier asked Mr. Marcos to certify his proposed P100 legislated wage hike as urgent. Senators approved the measure on third and final reading in February.

Meanwhile, the House of Representatives on Wednesday will resume deliberations on the proposed P150 and P750 wage hikes.

Labor group Federation of Free Workers (FFW) asked legislators to approve the P150 wage increase during the next hearing.

“This approval would be a significant step towards addressing the needs of Filipino workers and promoting a fair and just society,” FFW President Jose G. Matula said in a statement.