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The Tax Reform for Acceleration and Inclusion (TRAIN) Act, officially cited
as Republic Act No. 10963, is the initial package of the Comprehensive Tax Reform
Program (CTRP) signed into law by President Rodrigo Duterte on December 19,
2017. TRAIN consists of revisions to the National Internal Revenue Code of 1997, or the
Tax Code. This reform includes packages that make changes in taxation concerning
the personal income tax (PIT), estate tax, donor's tax, value added tax (VAT),
documentary stamp tax (DST) and the excise tax of petroleum products, automobiles,
sweetened beverages, cosmetic procedures, coal, mining and tobacco.

The prominent feature of the tax reform is that people who earn ₱250,000 annually
or ₱21,000 monthly and below are exempted from paying personal income tax (PIT). This
includes minimum wage earners, who were also exempted in the former tax system. On
the other hand, those earning over ₱250,000 have tax rates following a set PIT schedule.
Essentially, greater income is taxed at higher tax rates. This denotes that low to middle
income-earners get to have a higher take home pay, while high income-earners have a
bigger contribution to tax revenues. Increase in consumption taxes intend to
counterbalance PIT tax exemptions.

The TRAIN Act aims to address the reputed weaknesses of the Tax Code,
specifically through the following objectives:

 First, it intends to simplify the previous system to make it more straightforward and
 Second, it intends to create a more "just" taxation scheme, wherein taxation is staggered
and distributed on the basis of financial capability and the underprivileged are able to reap
more advantages.
 Third, it intends to improve the efficiency by which tax is collected, particularly tackling
issues of compliance.
 Fourth, it increases the tax burden felt by the general population thus increasing the
overall inflation rate.

The changes instituted by the tax reform is expected to be able to increase revenue
to finance the infrastructure, healthcare and education programs of the Duterte
administration. The notion that the poor will be taxed less than the wealthy population is
actually a propaganda widely spread by the government, the additional taxes imposed by
the government will just be passed down through the lower and middle income class thus
increasing the inflation.

In the long term, TRAIN Act is just the first from a series of tax reforms, as part of
the CTSP, which will be one of the principal means by which the 2020 and 2040 vision of
the incumbent administration is to be achieved. The vision in 2020 is that poverty will be
reduced from 21.6% to 14%, while 2040 sees the Philippines as having “eradicated
extreme poverty”, established “inclusive economic and political institutions where
everyone has equal opportunities” and achieved “high-income country status”. This can
be achieved if economic growth can be sustained by at least 7% each year and if the
source of growth can be shifted to investment from consumption. This means prioritizing
investments on people through "health, education, life-long training, social protection,
infrastructure, and research and development" and investments on infrastructure to boost

A block of congressmen identified with the political opposition has decided to

challenge in the Supreme Court the legality of the Tax Reform for Acceleration and
Inclusion Act, which was enacted recently by Congress and approved by President
Rodrigo Duterte.
They assail the TRAIN Act on two grounds—the law was ratified by the legislature
in a session that lacked the requisite quorum; and the law itself is anti-poor. Consumer
groups and other similar sectors have expressed their support for the court petition
against this new tax measure, but they are more concerned about the substantive aspects
of the law, rather than the technical objections raised by the opposition lawmakers.
Supporters of the TRAIN Act, however, contend otherwise. The Office of the
Solicitor General is expected to defend the validity of the law in the case now pending
before the Supreme Court.
Since the TRAIN Act will drastically redesign the existing tax environment in the
country, a discussion of the arguments in support of the law, and those against it, is in
Legislators responsible for the TRAIN Act contend that this new tax measure is
pro-people because it calls for lower income taxes for individuals. They add that the
reduction in income tax leaves individual taxpayers more money to spend on basic
necessities. It is also contended that the reduction in income tax will be a big help to those
in the lower and middle-income strata of taxpayers in the country.
While supporters of the TRAIN Act admit that there are considerable hikes in the
taxes imposed on many consumer goods and similar products, the reduction in income
taxes makes up for the hikes. They also stress that the infrastructure program of
President Duterte will be needing the revenue to be raised under this new tax law.
Those opposed to the TRAIN Act argue otherwise.
They contend that the reduction in income tax is rendered meaningless by the
tremendous increase in the taxes to be imposed on consumer goods, prime commodities,
medicines, electricity, and fuel. In particular, the prices of gasoline and fuel products are
expected to increase by three to four pesos per liter.
In turn, the marked increase in fuel prices will trigger a corresponding increase in
the cost of transporting people and goods, which will inevitably increase the prices of
practically everything else. Moreover, the labor sector will demand an increase in wages,
which will also add to the cost of manufacturing goods and the delivery of services.
Since the additional tax will increase the selling price of every consumer product,
the twelve percent value added tax (VAT) currently imposed on every sale of consumer
products will be computed against a higher selling price, which will necessarily mean a
larger VAT on the sale of what are already very expensive prime commodities to begin
Critics of the TRAIN Act lament that the new tax legislation not only increased the
taxes on prime commodities, but also reduced the tax on the importation of luxury
vehicles. The rationale for this manifestly pro-rich provision of the TRAIN Act is a mystery.
The critics maintain that it is easy for politicians to defend the TRAIN Act because
politicians wallow in power, wealth, and privilege. More specifically, politicians have
generous expense accounts by which practically everything they purchase, such as
groceries, airline tickets, and automobile fuel, are paid for by the taxpaying public. In
other words, it’s easy for members of Congress to impose higher taxes on basic
commodities since they are hardly affected by such tax hikes.
It is also pointed out that the TRAIN Act comes at a bad time because many
government officials have been wasting public funds.
Millions of pesos worth of dengue vaccines bought by the Department of Health
from abroad have turned out to be unsafe. Those vaccines are expiring soon, and there
is no assurance that a refund will be forthcoming.
The Commission on Audit revealed that over a billion pesos raised from the
infamous road users’ tax have been spent illegally by the Road Board. State auditors
also disclosed that officials of the office of the Presidential Adviser on the Peace Process
have embezzled P662 million mostly in the use of luxury vehicles.
Quezon City Mayor Herbert Bautista wastes public money on the purchase of
decorative tiles bearing his initials, and in their installation in many major roadways in the
Officials of the Philippine Charity Sweepstakes Office spent millions of pesos for
an office Christmas party last December.
The chiefs of the Maritime Industry Authority, the Dangerous Drugs Board, and the
Presidential Commission for the Urban Poor went on several unnecessary overseas trips
at the expense of the taxpayers. They were all fired by President Duterte.
Many judicial officials go on overseas trips which are either useless or
During the administration of President Benigno Aquino III, an estimated P186
billion in the Malampaya natural gas fund remained unaccounted for by his finance,
budget, and treasury officials.
Also under Aquino III, numerous government officials identified with the Liberal
Party were part of an all-expense paid junket to The Netherlands to watch a hearing on
the international arbitration case the Philippines filed against Communist China regarding
Chinese military expansionism in the West Philippine Sea. Many of those officials,
including then House Speaker Feliciano Belmonte and then Justice Secretary Leila de
Lima, were not even needed there.
Thus, if those needless expenditures of public funds did not take place, the TRAIN
Act may not be necessary to enact at all.

At the end of the day, the fact that remains is that questioning the constitutionality
of a tax legislation is always an uphill legal battle. That’s because the power of the state
to impose taxes is one of its inherent powers. Thus, the TRAIN Act is presumed valid
and its oppositors must prove otherwise in the Supreme Court.


TRAIN Law should be abolished because The TRAIN Law is expected to reduce
the income taxes of employed Filipinos enabling them to receive higher take-home pay.
But the law is feared to affect low-income families as increased excise tax on goods pulls
up prices of basic commodities. When President Rodrigo Duterte signed the passage of
the Tax Reform for Acceleration and Inclusion (TRAIN) Bill or Republic Act No. 10963
and offered it as a gift to the Filipino people last December, critics retorted it was rather
an “added burden”.

Duterte claimed that the TRAIN is the administration’s biggest Christmas gift to the
Filipino people. Yet, progressive groups here criticized the law in their first protest of the
year. Therefore I say the TRAIN Law is a burden, not a gift, that’s why it should be