Duterte Leaves to Congress Fate of Tax Law Blamed for Inflation

(Bloomberg) -- Philippine President Rodrigo Duterte said he will let lawmakers decide what to do with a tax law that his administration lobbied for and is now being partly blamed for rising prices.

“The law was enacted by Congress, I leave it to Congress to decide whether or not to amend, suspend or modify the law,” Duterte said in a speech in Manila before leaving for South Korea late Saturday. Duterte said there was nothing he could do if lawmakers decide to keep the law that will help fund its 8.4 trillion-peso ($160 billion) infrastructure program.

The tax reform, which took effect in January, imposed excises on oil products, raised levies on sugary drinks and automobiles and cut personal income taxes. Incremental revenue from the measure is estimated at 82.3 billion pesos this year, Finance Secretary Carlos Dominguez said in December.

An increase in workers’ pay can’t be legislated, Duterte said, adding rising global oil prices were to blame for accelerating inflation as the the Philippines imports almost all of its fuel.

Inflation accelerated to 4.5 percent in April, the fastest pace since at least January 2013, and the central bank expects consumer prices jumped further in May due to oil and rice prices.

The Department of Finance has said it does not support calls from some lawmakers to suspend higher oil taxes as this will affect revenue. Amid rising oil prices, the government has said Congress will have to amend the law to roll back the levy on oil as the measure only provides for the suspension of the next increase in excise tax, due in 2019.

Duterte, at the same briefing, said he’s not in favor of giving out new mining permits and reiterated his opposition against open-pit extraction.

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