Manufacturers could raise the suggested retail price (SRP) of basic goods and commodities as long as the increase is “justifiable,” Trade Secretary Ramon Lopez said on Thursday.
In a press briefing, Lopez said manufacturers were expected to absorb higher production costs as a result of new excise tax rates on fuel.
The new excise taxes, though, would have a “very minimal” impact on the overall cost of production, he added.
A Department of Trade and Industry (DTI) policy allows manufacturers to raise the SRP on their products even without government approval.
For now, Lopez said he saw no reason to change that policy until the price movement had become “drastic.”
Measure vs profiteering
“Unless we see a reason, I might not bring it back yet,” Lopez said, referring to the preapproval process on SRP increases as a proactive measure against profiteering.
Lopez said that while the new excise tax rates on fuel would affect the transportation cost of manufacturers, this would account for less than 5 percent of the overall production cost.
“Because of the minimal change, we are confident prices would not move,” he added.
Despite the concerns raised by industry groups, the government passed the Tax Reform for Acceleration and Inclusion (TRAIN) Act late last year.
The tax reform package lowers the personal income tax of many Filipinos but raises consumption taxes on cars, coal, fuel and sweetened beverages, among other goods.
The government clarified that the new tax rates would apply only to fresh stocks of fuel and beverages.
Under the TRAIN Act, an excise tax of P2.50 per liter will be imposed on diesel and bunker fuel starting this year. This will go up to P4.50 in 2019, and P6 in 2020. The excise tax on gasoline will increase from P4.35 per liter to P7 this year.
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