A Critique

Paper about
Train Law
Submitted to: Jeehan Tomas
Submitted by: Joshua Flores
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. The TRAIN Act is the first of four packages of tax reforms to the National
Internal Revenue Code of 1997, or the Tax Code, as amended. This package
introduced changes in personal income tax (PIT), estate tax, donor's tax, value
added tax (VAT), documentary stamp tax (DST) and the excise tax of tobacco
products, petroleum products, mineral products, automobiles, sweetened
beverages, and cosmetic procedures. The prominent features of the tax reform
are lower personal income tax and higher consumption tax. Individual taxpayers
with taxable income not exceeding ₱250,000 annually are exempted from
income tax. The exemption for minimum wage earners is retained in the revised
tax system. Tax rates for individual taxpayers still follow the progressive tax system
with the maximum rate of 35%, and minimum rates of 20% (taxable years 2018 to
2022) and 15% (2023 onwards). On the other hand, consumption taxes, in the form
of higher excise tax on tobacco products, petroleum products, automobiles,
tobacco, and additional excise tax on sweetened beverages and non-essential,
invasive cosmetic procedures were introduced. It also expanded the VAT base
by repealing exemption provisions in numerous special laws. The TRAIN Act is
aimed to generate revenue to achieve the 2022 and 2040 vision of the Duterte
administration, namely, to eradicate extreme poverty, to create inclusive
institutions that will offer equal opportunities to all, and to achieve higher income
country status. It is also aimed at making the tax system simpler, fairer and more
efficient. Regardless, contentions about the passing of this law has been present
since the beginning and the subsequent reception by the people since its
ratification has been controversial. In the first quarter of 2018, both positive and
negative outcomes have been observed. The economy saw an increase in tax
revenues, government expenditure and an incremental growth in GDP. On the
other hand, unprecedented inflation rates that exceeded projected
calculations, has been the cause for much uproar and objections. There have
been petitions to suspend and amend the law, so as to safeguard particular
sectors from soaring prices.

TRAIN is the first of five packages of the comprehensive tax reform program.
Other packages deal with corporate income taxation and modernizing fiscal
incentives; sustainable financing for Universal Health Care through increased sin
taxes on tobacco and alcohol; fixing our broken property valuation system; and
reforming capital income taxation. The program has always been presented by
the government’s economic team as not an end in themselves, but means of
making the tax system one in which everyone contributes her or his fair share of
our investments in infrastructure and human development. All packages seek a
fairer, simpler and more efficient system, while only two are also revenue
enhancing, TRAIN and the sin tax package for the long-term financing of
Universal Health Care.

The government passed TRAIN in 2017. By 2018, government attained 108

percent of its collection target and, as earmarked in the law itself, funded
crucial infrastructure and social protection programs. An estimated three
hundred thousand jobs were created in construction due to increased spending
in infrastructure and, as of the first quarter of 2019, P22 billion were given to poor
households through the Unconditional Cash Transfer program and P500 million
support to qualified jeepney operators via the Pantawid Pasada program.

For the poor, they’re on a big disadvantage because their earnings are not taxed;
hence, any change in the tax rates won’t be provide an impact. On the other
hand, price adjustments, hike in transportation fares and commodities will greatly
affect them.

In opposition to the TRAIN Law, Chair of the Senate Committee on Public Services
Senator Grace Grace Poe recommends suspension for the said law. To be fair,
the need for such compensation abates when you account for the unconditional
cash transfers that TRAIN gives out to the poorest 50% of households. According
to latest data, 9.2 million out of the 10 million target households already got their
money, albeit belatedly.

Even though they will not pay anymore taxes but prices of the foods, electricity,
water bills, petroleum, and others increases. But still they can benefit it because
the government will provide their need like jobs, house, businesses. There are
advantage and dis-advantages in TRAIN LAW. More benefits to the Filipino
people in terms of better income, health and social services and increase in
infrastructure projects which open more job opportunities in the construction
sector especially in the countryside.