TRAIN is not to blame

People are worried about the rising price of things they buy, and it is a concern. But TRAIN is not the primary reason. So blaming TRAIN or worse, cancelling it won’t reduce inflation. And certainly won’t roll back prices. It would just result in a lack of the infrastructure and better social services we urgently need.

It might seem I’m harping too much on TRAIN but this is a major reform that has to be done. Quite simply it will make the Philippines a more attractive place to invest. That will mean more jobs, and more money to pay for better jobs. Because of TRAIN there will come a time when you’ll be able to get to work in under an hour. With TRAIN government can afford free education for your kids; and healthcare for you and your family. Without TRAIN, it can’t, or must go into debt that will threaten the country’s fiscal stability. To stop the TRAIN now would be a mindless mistake.

TRAIN only added 0.4 percentage points to the 4.5 percent inflation in April – that’s when people started to complain about rising prices. But those who have a job and earn P250,000 and below per year now pay no tax, when before they did. Those earning more now pay less, so can afford some higher prices.

For the poor they buy very little, and almost all of what they buy is not taxed under TRAIN. To cover the little that is impacted they now get P200 per month to cover that increase. That’s cost government P2.5 billion. Rice accounts for around a fourth of the poor’s budget—a significant portion.  And the price of rice has gone up by around 10 percent compared to prices a year ago.  That (or a miniscule amount at most) was not due to TRAIN. It was due to the National Food Authority’s (NFA) admission of low rice inventory that raised unnecessary panic, and unnecessary prices. If the NFA can be taken out of the trading of rice, as I’ve long argued, and a reasonable tariff applied in an open market the price of rice will go DOWN.

Fish are in short supply due to weather-related factors that contributed to low productivity so prices have risen.

Then there’s vegetables, which account for 5 to 7 percent of their budget. All the above products are exempt under TRAIN. As is 3-in-1 coffee, which most of them consume.

Their electricity comes under the lifeline program. Poor households consuming less than 100 kwh per month don’t pay as they are subsidized by the government.

The Energy department has already made arrangements with oil firms to provide discounts to public utility vehicles while the Transportation department is finalizing guidelines for subsidies and vouchers for franchised public vehicles. They need to move faster on this though.

TRAIN has, indeed, increased the cost of some things. Cigarettes is one of them (raised P3.7 billion toward a better life for all of us). Are you going to complain about that or sugary drinks (at P2.5 billion)? The only one that can be questioned is fuel. The TRAIN law applied an excise tax of between PHP 2 to PHP3 on gas and diesel. The real blame, though, lies with international oil prices and the depreciating peso. These have caused crude oil prices to rise by P7 to P10 per liter. Triple the impact of TRAIN. The poor don’t spend directly on gas or diesel. They walk, or might use public transportation. There have been no fare increases for tricycles or jeepneys yet although there are calls for fares to increase.

Let’s put the blame where the blame lies, international price movements, supply shortages and unscrupulous, might we say, heartless traders using TRAIN as an excuse.

Don’t get me wrong, I’m as sympathetic as anyone to the plight of the poor. And I’ve fought for their betterment for years. But I also look at facts dispassionately, I try to avoid emotionalism. The facts are that the poor are not negatively impacted by TRAIN, except in a very minor way. As to the rest of us, inflation has always been amongst the top concerns of the public, regardless of the inflation rate. And net incomes have risen that helps cover that rise.

The bottomline is, almost everyone will benefit from TRAIN as the infrastructure we desperately need gets built. Even in the short term the poor get their cash transfer, and the middle class get more take home pay.

Stopping the TRAIN won’t solve anything.

E-mail: wallace_likeitis@wbf.ph