DOOMSAYERS and critics of the government have railed against the Tax Reform for Acceleration and Inclusion (TRAIN), painting a gloomy scenario of rising prices of basic commodities and services that would leave the consumers helpless.
We’ve heard that before, when the government began implementation of the Value Added Tax Law two decades ago.
The dire predictions not only fizzled off but VAT also allowed the government to arrest the growing deficit, enabling the Philippine economy to gain strength.
Sure, there was a period of price spikes at the start of VAT’s implementation but it was brief and the effects were minimal, as people began to fully understand how the new system works.
The same could be expected the TRAIN. Based the assessment of the Monetary Board inflation would be inching up to 3.4 percent this year before easing to 3.2 percent in 2019. This is well within the BSP’s inflation target at two to four percent between 2018 and 2020.
To ensure against undue price increases, concerned government agencies such as the Department of Trade and Management and the Department of Energy are monitoring the implementation of the new tax scheme.
The Bangko Sentral ng Pilipinas sees no need for intervention but on the lookout and ready to act on any risks to the inflation outlook and ensure price stability.
Just like any ride, the initial acceleration of TRAIN could be a little jerky. But once it gathers speed, expect a smooth ride.