I opened a new tab of my browser and saw this news on my feed from yesterday. The news is fascinating. I did not realize that the value of our money has gone that low.
Partial screenshots of the news. Read the whole article here.
Prices of basic commodities and services started to rise at the start of this year because of the implementation of The Tax Reform for Acceleration and Inclusion (TRAIN) Act. You can find more details here but in a nutshell, it is reducing the personal income taxes of workers while increasing the excise taxes on petroleum products, automobiles and sweetened beverages. When the proposal of this act came out of the news, many articles included possible computation and savings of workers because of the reduced tax brackets. There were those who also included computation on possible prices of the products that will be affected.
As I saw it on social media, many people rejoiced. I did not. I wonder how I am supposed to rejoice when the reduced personal income tax is being reciprocated for petroleum products, automobiles and sweetened beverages. These three products cover almost all of the basic commodities and services that we consume or utilize on a day to day basis.
I am not an economist or financial analyst at any rate but I think I can fairly say that I know at least the very basics of supply and demand. If taxes are increased for those corporations or businesses that are providing basic commodities, where do we expect them to get their payment for the additional tax? From the people. How? By increasing prices of their products or services. Now we are seeing it but many did not understand until they see it happening.
Even my housemates did not understand the consequences. Prior to the implementation of TRAIN, I hear praises about it. When I try to explain, they keep quiet but I don’t think they were convinced. They just didn’t want a debate. When it is already in place, I got a chance to present to them the actual effect about a couple of months ago.
Soft drinks are not regular at home as we all are not in favor of it but we have it once in a while. There was once when one of my nephews kept quiet and bought a bottle of Sprite. Over lunch, I noticed the bottle is printed with 1.75L so I checked with my nephew.
“You bought that at the price of two liters, right?”
He was surprised and said, “Yes. I asked for two liters and that is what they handed to me. Why?”
“It is not two liters. Did you notice the volume printed on the bottle?” I do not recall a bottle of 1.75 liter volume of soft drinks in the market prior to the new tax scheme. There were 1.5L and 2L bottles.
He took a look at it and realized what I was saying: the same price but with reduced volume. Soft drinks are sweetened beverages thus impacted by the increased excise tax. I pressed on.
“That is the effect of the new tax scheme. Corporations will find a way to somehow make the people not feel the change in their prices. But we as consumers have to be observant.”
Then I went on recalling my rant on Facebook about my taxi fare when I was charged of additional 70% from the usual fare of my regular route. Yes, that is a whopping 70% increase! At this rate, even the savings from the reduced personal income tax will not be enough to cover the additional expenses. That is for the transportation alone. How much more with other commodities and services?
Prices of basic commodities and services have soared so high and yet we cannot afford to increase minimum wage to even at least half of the price increase rate. I see comments on social media that the concept of TRAIN is good but the implementation strategy is a wreck. I thought TRAIN concept is the strategy in itself so how is the former good and the latter a wreck? Again, I am not an economist or financial analyst. And I may not have a good suggestion for the continuing inflation. I just hope our government bodies will find a median because as I see it, the poor are getting poorer...
