The bakers also told the National Price Price of Pinoy Tasty Seen to Go Up Coordinating Council two weeks ago that they do not have an alternative for Turkish The price of Pinoy Tasty (sliced loaf of flour since the locally milled cheaper variant bread made of cheaper flour) may go up by "Harinang Pinoy" does not meet their stand- 10 to 15 percent effective this month due to ards. higher cost of flour. The Philippine Association of Flour Bakers said this yesterday ahead of the" Millers (PAPMIL) has petition with the anticipated announcement today of the De- DA the imposition of anti-dumping duties partment of Trade and Industry (DTT) on the against Turkish flour. possible impact of the possible imposition by the Department of Agriculture (DA) of higher Based on its petition, PAPMIL said the tariffs on Turkish flour, which is used in average price of Turkish flour in 2010 was Pinoy Tasty. $276 per metric ton while its domestic price was $600. Currently priced at P37 per 450-gram loaf, the Pinoy Tasty could hover near P40 The following year, the export price was per loaf, bakers said. at an average of $388 per mt against $600 per mt in Turkey. Last year, the average According to the bakers, supply of Turkish export price was down to $340 per mt but the flour is quickly vanishing following the domestic price was at $470 per mt. announcement last Monday of DA Secretary PAFMIL claims that exports of Turkish Proceso Alcala that he would recommend flour to the Philippines grew 16 percent in the imposition of a 20-percent duty on flour 2011 and by 71 percent last year. This is in coming from Turkey. contrast with the growth of the local flour The sources said they have yet to get a milling industry of 1 to 2 percent per year. copy of the administrative order that would Meanwhile, Lacierda said, the DTI put in effect the higher duty on the product. Director Vic Dimagiba through Undersec- But presidential spokesman Edwin retary Zeny Maglaya, met with the different Lacierda did confirm that there is a pending millers and bakers association in the country hike in the prices of Pinoy Tasty and Pinoy following reports of a pending price increase Pandesal but assured the public that their in bread after the Department of Agriculture prices would remain at their current levels proposed a tariff hike on imported flour from for now, pending a review of the proposed the current 7 percent to 20 percent. new rates by the DTZ. Source: www.malaya.com.ph. Lacierda also assured that other bread Reprinted with permission from products are not covered by the proposed Malaya Business News writers August 1, 2013 increase. The bakers said the 10 to 15 percent Questions: increase is based on a formula of major ingredients, the biggest component of which !. Do you think the demand for Pinoy Pandesal and Pinoy Tasty is elastic? is flour. They said they were able to justify What do you think will happen to the the increase with the DTI. demand for pandesal and tasty when The bakers met with DTI Secretary prices increase by 15% and by 100%? Gregory Domingo last Tuesday. 2. What do you think will happen to the Bakers said they buy locally milled supply of pandesal and tasty if the price flour P380 to P900 per 25-kilogram bag but of locally milled flour increases by 15% Turkish flour remains cheap at P720. and by 100%?3. What are the substitutes for pandesal and tasty? Do you think the prices of these substitutes will likewise increase? Do you think the government should implement a price ceiling for pandesal and tasty?To manifest efficiency in tax collection, P165B Projected from "Sin Taxes" a government should be able to increase the "The national government expects to earn amount of taxes it collects every time income levels grow. P154.73 billion in additional revenues from 2013 to 2016 if Congress approved a new Data from the finance department showed 'sin tax system this year," the Department of that the country's tax effort has been in a Finance (DOF) said.' declining trend from 14.1 percent in 1998, Data from the finance department showed adding on worries of the three international that once Congress approved a new excise tax credit rating firms and investors. system on "sin products"this year, the govern- In an effort to further improve the govern- ment could easily earn P31.35 in additional ment tax efficiency, the finance department is revenue next year. pushing for the restructured excise tax regime Of the amount, the DOF expects P26.87 and rationalization of fiscal incentives. billion revenue from cigarettes, another P3.03 London-based Fitch Ratings earlier said billion from fermented liquor, and the re- that the Philippiries' low revenue base is the maining P1.45 billion from distilled spirits. country's key weakness in the sovereign credit By 2014, state revenues from sin prod. profile, suggesting the need for a structural ucts would increase to P39.02 billion. Of the reform rather than just administrative meas- amount, P34.72 billion will be contributed ures. by tobacco companies, P2.52 billion from Fitch cited the proposed reforms to the fermented liquor, and P1.78 billion from 50-called "sin taxes" on alcohol and tobacco distilled spirits. products as a measure that would enhance Government Income from excise tax is the government's revenue sources. expected to further rise come 2015 as it is Source: Chino S. Leyco expected to generate an additional P42.68 Rights reserved, courtesy of billion revenues. Manila Bulletin Publishing The DON estimated that smokers will Corporation, August 21, 2012 pay P36.27 billion in excise tax, while revenue Questions: from fermented liquor will grow to P3.79 billion and P2.62 billion would come from 1. Is the proposed sin tax progressive or distilled spirits. regressive? Who will be burdened most? Why? Meanwhile, the DOF projected that state revenues from sin product to decline in 2016 2. Will there be substitution between to P41.51 billion. brands? Why? Of the amount, the government sees P35.38 billion in taxes from cigarettes, P3.03 billion from distilled spirits, and P3.1 billion from fermented liquor. With the new excise tax system, the goor ernment expects its efficiency in collecting taxes would likewise improve, putting the country in better position to its goal of attain- ing investment grade. Tax effort, used to gauge efficiency of tax collection, is computed as a percent of the country 's gross domestic productLuxury Vehicle Sales Decline 30% MANILA, Philippines - Sales of luxury velucles in the first quarter dropped by a steep 30 percent as buyers, mostly upwardly mobile middle class, have become extra careful not to attract the overzealous eyes of the Bureau of Internal Revenue ( BUU. An official from one of the luxury car companies in the country said Maree luxury car brands - BMW. Mercedes Benz, and Lexus-only sold 264 units in the January March prohibitive because of the huge tax burden period this year or 30 percent lower than the imposed on these imported cars. same period last year. The robust sales of hybrid vehicles in "Because of the heightened campaign of the US, Malaysia, and Singapore have been the BIR, buyers are scared, especially that largely attributed to the duty-tax treatment most of our buyers are middle-class business- and other perks given to these vehicles. men, who can now afford to upgrade their lifestyle," the source said. For instance, a Lexus car in the US could sell for $200,000 with all the taxes but ends Even the corporate clients and legitimate up only at $100,000 a unit because of the businessmen have shelved their plans to buy removal of taxes. luxury vehicles on apprehension they could face undue scrutiny from this tax agency. In the Philippines, hybrid vehicles are slapped with import duty excise tax, vat, and Of the three luxury models, the biggest sales tax and 4 percent municipal tax. decrease was registered by Mercedes Benz with 40 percent negative growth. Without these taxes, a P2.3-million hy- brid could sell at considerably lower price of German vehicle brand, BMW, posted the P1.6 million. highest sales but declined by 37 percent, while Lexus posted a modest 2 percent decrease. Source: Bernie Cahiles-Magkilat Lexus sold a total of 75 units and is eyeing Rights reserved, courtesy of to sell a total of at least 300 units this year Manila Bulletin Publishing from 264 units last year. Corporation, May 2, 2012, 2:16 a.m. Lexus Manila is set to introduce major model changes this year including its best Questions: selling RX, which is selling for Pl.3 million. 1. Is the demand for luxury cars elastic or Meantime, the hybrid models of Lexus inelastic? Explain and illustrate. have not really picked up as hybrids still 2. What factors influence this elasticity? account for a very small portion of total industry sales. 3. Is specific tax a better alternative to raise tax revenue? Explain. Lexus hybrid models have sold only 50 units so far. SUMMARY Its hybrid cars are GT 200, GS45011, Price elasticity of demand is the degree RX450H, LS60OH with GT model accounting of responsiveness of quantity demanded to a for 40 percent of sales, being the most afford change in price. It is measured by dividing able at P2.3 million to P2.8 million. the percentage change in quantity demanded There have been a good number of hybrid by the percentage change in price. vehicle brands in the country but only Toyota has full hybrid models, the othera are "mild" Two Measures of Price Elasticity hybrid brands. 1. Are elasticity is the coefficient of the price "We need to educate the market because elasticity of demand between two points hybrid is still a little percentage of vehicle along the demand curve. sales," an official said. 2. Point elasticity is the elasticity at one Aside from the lack of awareness, the point along the demand curve. price of hybrid vehicles has remained very