Philippines tax reform impacts consumer spending, lifts inflation

MANILA - To help fund the Government’s Build, Build, Build programme, the Duterte Administration is pushing a comprehensive amendment of the National Internal Revenue Code (NIRC) of 1997 with the Tax Reform for Acceleration and Inclusion (TRAIN).  

Within 18 months in office, the first of a series of reforms was passed on December 19. Focussing on the consumer, TRAIN 1 cut personal income taxes while raising taxes on select consumer goods.

ANZ Bank notes that following the implementation of tax reforms in January, both headline and core inflation surged.

“We expect average inflation at 4.1% in 2018 and 3.4% in 2019. If realised, it would be the first inflation overshoot since 2008, ANZ says.

“While domestic demand will likely remain strong, there is a risk of some moderation in consumption growth.”  www.live.anz.com (ATI).