Although there are some advantages, implementing TRAIN Law has many disadvantages
and should not be part of the system of every Filipino, for us not to lose the quality of health,
education, and most especially life that we have. Last December 19, 2017, President Rodrigo R.
Duterte approved the suffering of today's Philippines' poor and oppressed with a cohesive
version of the bill on both Houses. The Republic Act No. 10963 is known as the Tax Reform for
Acceleration and Inclusion (TRAIN) Act, the first package of the Comprehensive Tax Reform
Program (CTRP) that was envisioned by the Duterte Administration. The Republic Act seeks to
create a more "efficient and effective" tax collection mechanism. According to the Department of
Finance (DOF), It will set the staging ground to rescue 21 million Filipinos from poverty in the
long run because additional revenues from this law will allow the government to spend more on
health, education, and other social services that will provide opportunities for prosperity to all
Filipinos. But the said act technically and constitutionally lowers the Personal Income Tax (PIT),
simplifies both the Estate and Donor’s tax and the Value-Added Tax (VAT) System, increases
the excise tax of automobiles, and petroleum products, and worst of all, on the sweetened
beverages.
For the poor, they’re at a big disadvantage because their earnings are not taxed; hence,
any change in the tax rates won’t provide an impact. Price adjustments, increasing tax rates, and
transportation fares, and commodities, on the other hand, would have a significant impact on
people. As a response, Filipino workers have protested about the country's high tax rates, despite
getting what they consider to be inadequate public services. TRAIN is widely criticized for its
alleged adverse effect on the poor, especially the claim that implementing it would result in
higher prices. The following are just some of the major potential negative impacts. First, excise
taxes on sugar-sweetened drinks will burden the bottom sectors, particularly those who are
already tax-exempt under the current taxation system and therefore will not benefit from the
lowered tax rates and there will be higher property taxes due to higher property valuation.
Second, the VAT on low-rental housing may lead to higher rental costs. Third, investors who are
looking to benefit from PEZA (Philippine Economic Zone Authority) incentives may be
discouraged by the removal or restructuring of some of these incentives. Fourth, while for small
businesses like sari-sari stores, being taxed on gross income rather than net income (computed
after expenses) can mean higher tax payments, Lastly, inflationary effects of higher petroleum
prices are seen to mostly affect the bottom 60% of households. The government plans to
counteract these effects with a "transfer scheme" that will divert about P30 billion from
petroleum excise taxes to help the poor. However, this plan has been denounced as unsustainable
(it is expected to last only one to four years) and a "logistical nightmare." While some sectors
have welcomed the initiative, others have criticized it, arguing that it could have a negative
impact on the lowest earners. According to Punongbayan (2019), “when inflation shot up to
record highs – two studies by researchers at the Philippine Institute for Development Studies
(PIDS) show that TRAIN worsened the plight of millions of Filipinos.” The tax reform program
TRAIN will provide a significant impact on an average wage Filipino earner as adjusting excise
taxes would raise the prices of some commodities faced by Filipino consumers thus, the TRAIN
Law contradicts progressive and pro-poor taxation. The aim to lower taxes for the poor and
improve the quality of life of the Filipino citizens was negated by the government’s drive to
increase revenues. Instead of easing the burden of over-taxation, the TRAIN Law worsens the
misery of Filipinos.
References
Punongbayan, J. (2019). [ANALYSIS] How the TRAIN law worsened poverty, inequality.
Retrieved March 18, 2021, from the URL: https://www.rappler.com/voices/thought-leaders/how-
tax-reform-law-worsened-poverty-inequality-philippines
