The robust retail sales in malls, fast food restaurants and other dining places point to higher consumer demand as the Tax Reform for Acceleration and Inclusion (TRAIN) Act has indeed put more money into the pockets of most Filipinos since the law’s implementation in January this year, according to a top Department of Finance (DOF) official.
Finance Assistant Secretary Antonio Lambino said that retail giants and fast food chains like Robinsons Retail Holdings Inc., Philippine Seven Corp., Puregold Price Club and the Max’s Group Inc. have all reported more robust sales since this year’s implementation of the TRAIN, which had slashed personal income tax (PIT) rates benefitting 99 percent of all taxpayers.
According to DOF estimates, the implementation of TRAIN gave a combined P12 billion in additional income to the country’s individual taxpayers, most of them compensation earners.
“The significant growth in sales reported by retail establishments and restaurants point to the fact that people now have more money to spend as a result of the hefty PIT cuts under TRAIN, which is now benefiting 99 percent of our taxpayers,” Lambino said.
With TRAIN, taxpayers with a net taxable income of P250,000 and below are exempted from paying the personal income tax (PIT). Those earning less than P8 million annually also get PIT cuts under TRAIN.
He said Robinsons Retail Holdings Inc. posted a 9.6 percent growth in its profits during the second quarter with its net sales rising by 13.5 percent to P31.5 billion.
Lambino said the company, in its disclosure to the Philippine Stock Exchange (PSE), attributed the increased take-home pay of consumers under the TRAIN as among the major factors contributing to its profit growth in the April-June period.
Philippine Seven Corp, which licenses the 7-Eleven convenience stores, likewise posted higher net income of P342 million, up by 18.9 percent from P288 million posted during the same period a year ago, he said. Its second quarter revenues rose to 19.2 percent to P11.55 billion from last year’s P9.69 billion
Its net earnings of P533 million in the first six months of the year was up 19.4 percent from P446 million year-on-year despite the increase in commodity prices. The retail sales in all stores amounted to P22.2 billion during the first half of 2018, representing a 22.7 percent hike from the previous year’s level.
He said the 7-Eleven operator also pointed to the TRAIN’s benefits of lower personal income taxes, which in turn led to additional income for taxpayers, as the reason behind the increase in sales of all its stores, despite the price hikes.
Moreover, in a statement, Puregold Price Club, Inc. (PGOLD) said its net income grew by 25.6 percent in the first half of 2018 to P3.08 billion. Its consolidated net sales increased 13.2 percent to P64.03 billion.
According to media reports, Puregold claimed it benefited from higher consumer spending due to increased levels of take-home pay after the implementation of the TRAIN.
Among the listed companies that have reported a higher earnings in the second quarter was the Max’s Group Inc., whose net income rose to 34 percent for that period. Among the company’s brands are Max’s Restaurant, Pancake House, Krispy Kreme, Teriyaki Boy, Le Coeur de France, Dencio’s and Jamba Juice.
Citing company disclosures and Bloomberg data as sources, Lambino also said that in the first quarter, sales of fastfood chains also rose, with McDonald’s reporting growth of 40.6 percent and Jollibee 18.8 percent.
Among real estate developers, Sta. Lucia Land reported sales growth of 25.3 percent; Rockwell Land, 6.5 percent; Ayala Land, 18.8 percent; Megaworld, 8.1 percent; SM Prime, 11.1 percent and Century Properties, 104.5 percent.