(Source: Sunstar | January 5, 2017)
The Department of Trade and Industry (DTI) on January 5, vehemently warned traders against overpricing basic goods because of the new tax reform law.
Trade Secretary Ramon Lopez said violators of the newly-signed Tax Reform for Acceleration and Inclusion (Train) Act would face a fine ranging from P20,000 to P1 million.
He said the impact of the new law on prices of goods should be “very minimal.”
“The impact of Train (Act) on the prices (of goods) is very negligible, very minimal. And just to cut to the chase, just a concrete example, a price of a canned goods, like canned sardines which costs P14, the impact would be just an additional five centavos,” the Trade chief said.
“Those who will be directly hit, in terms of prices, would be those that were directly given an excise tax, such as soft drinks and fuel. So that’s it. But all the other products, there will be a very negligible impact on the cost of goods sold or sa production cost,” he added.
President Rodrigo Duterte on December 19 signed into law the Train Act, which exempts taxpayers with an annual income of P250,000 and below from paying personal income tax.
While the tax reform law benefits the minimum wage earners, it also imposes excise tax on sweetened beverages, petroleum, automobile, tobacco, and coal.
Consumers have feared that the Duterte government’s first tax reform package would result in the sudden rise in the prices of basic goods. Lopez, however, allayed the public’s worry, saying that the Train Act would lead to a “more positive” result because of restructuring of personal income tax rates.
“The impact of Train is is more of positive because of tax exemption of the dominant percentage of wage earners with P21,000 and below per month of income. Imagine, they don’t have to pay P6,000 worth of tax because they are exempted. That’s an additional budget for them, additional disposable income or possible savings for them, for their use,” he said.
The Trade Secretary also gave assurance that the government would monitor the prices of goods to make sure that consumers would not suffer from the implementation of the tax reform law.
He added that those who would violate would face stiffer penalties.
“Like what we said earlier, there’s no reason to worry because there will just be a minimal effect, especially to basic goods,” Lopez said.
“Is five centavos still higher for you? If they raise it, let’s say at around P2, we will go to them and ask for their explanation. As to the penalty, the penalty would range from P20,000 to P1 million in each market firm.”
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