Train Law

    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.

Groups say, TRAIN law is a 'burden' for poor sector Cause-oriented group Tindig Pilipinas on Wednesday held a rally outside the Department of Social Welfare and Development (DSWD) office in Quezon City to protest the negative effects of the Tax Reform for Acceleration and Inclusion (TRAIN) law.

The group said the law is a burden on poor citizens as their earnings are not enough with the price increase of basic commodities.

In a statement, the group said the DSWD "failed to provide cover to the 10 Million families that the DOF (Department of Finance) already stated that will be adversely affected by TRAIN."

"Social protection is meant to provide safety nets for the vulnerable sectors of society but we have not seen any coming from this government," the group added.

Cesar Apolinario reported on Balitanghali that Tindig Pilipinas was joined by 500 residents, who are asking for an increase in the allowance.

The residents said they receive allowances regularly from the government, including educational assistance, annual medical and transportation allowances and a burial allowance

However, due to the effects of the TRAIN law, they said the amount they receive is no longer enough.

DSWD officials learned of the presence of the said residents, who are mostly mothers, were allowed to enter the office to have their documents processed.

In their full statement, Tindig Pilipinas scored President Duterte and his cabinet for supposedly being numb to those bearing the brunt of the price hikes.

"When Mr. Duterte became president, he promised the poorest of the poor, our most vulnerable sector of our society, that its assistance to them will no longer be conditional but rather be an Unconditional Cash Transfer Program, a dole out in the truest sense," the group said.

"Well, two years have since passed, President Duterte’s TRAIN wreck has caused untold sufferings on the poor, caused higher inflation resulting to the prices of even the most basic commodities such as rice, fish and all the Bahay Kubo vegetables increasing dramatically," they added.

"Meanwhile, joblessness has risen and nothing has happened to their much ballyhooed Unconditional Transfer Program. The daily 6 pesos given to a family of 5 is hardly assistance at all, it is an unconditional insult to the poor," it said. — Margaret Claire Layug/BAP, GMA News

There are some filipino are not agree with the train law because of the negative effects of this .At the start of January 2018, the TRAIN Law, or commonly known as Tax Reform for Acceleration and Inclusion immediately took effect. For some Filipinos, this law is a blessing as take-home pays and company bonuses increased depending on salary tax bracket. Personally, I can attest to this. I am earning less than 250,000 pesos a year (Yep, Civil Engineers aren’t paid that much), hence I am exempted to pay for personal income tax. I must admit, it really helped me a lot. That wage portion became an addition to my monthly savings.

Though this law is beneficial for some, not every Filipino is pleased to have this implemented, especially those who are earning a minimum wage, self-employed individuals, and small unregistered enterprises. As a whole, these folks are considered as informal economy since they are neither taxed nor monitored in the country’s overall economy census. Part of this sector includes small vendors, farmers, fishermen, PUJ and pedicab drivers, and contractual construction workers. Among others, these earners are having a hard time coping with the rising inflation of goods brought by the said law, and here are the main reasons why:

Excise tax on sweetened beverages. Aren’t you blown away by the recent soda prices? I remember buying a liter of soda last month which costs 35 pesos! It was only 23 pesos last year! What happened? Well, these sugared drinks are now taxed at 6-7 Pesos per liter depending on their sugar content. My family isn’t a great fan of soda and other sweetened beverages. We’re coffee addicts. Thankfully, milk, pre-packed coffee, and natural fruit and vegetable juices are exempted. However, most Filipinos couldn’t swallow their lunches well without having a sip of sodas. If they can’t afford it anymore, then there’s water with little to no cost at all. It’s a healthier counterpart after all.

Added tax in cigarettes too? I won’t complain! Cigarettes, from its base price, 30 pesos, rose to 32.5 pesos recently and this will continue to rise with an increment of 2.5 pesos per year until 2022. Aside from being a non-smoker and a smoke hater, my father is a cigarette smoker which I strongly condemn. I noticed how his cigarette consumption lessened during the implementation of SINtax years ago. I hope this time it will completely eliminate his addiction to cigarettes and I hope it will do the same with our fellow Filipinos.

More taxes for car owners. If you’re planning to buy a car, brace yourself for the doubled excise tax from 2% to 4% for cars having a cost of P600,000 and below. If you’re eyeing on a car having a worth over P4 Million, then be prepared for a tax up to 50% of the vehicle’s value from its previous 10%. Commuters can also experience adverse effects on transportation expenses due to a tax increase on petroleum products up to P8 per liter. Diesel, LPG, and Kerosene are also subjected to additional tax ranging from P1 to P3 per liter.

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The above points are just a few of the counter effects of TRAIN Law. If we look deeper, the added taxes on merchandises such as sweet beverages and cigarettes may result on healthier lives for more Filipinos for they will be forced to trim down their consumption of these products which could be detrimental to health. However, additional taxes for cars and fuels could be burdensome for the Filipinos, both the car owners and commuters.

Along with the price hikes of the above-mentioned commodities, common goods such as rice, canned goods, and other grocery items are starting to have the bullish price trends as well. This caused a domino effect that even sidewalk vendors tend to increase their price lists to make their ends meet. This is the reason why several sectors coin this TRAIN Law as Anti-Poor Law for they believe only those who are middle to high earners could benefit from it.

Militant group Tindig Pilipinas has slammed President Rodrigo Duterte for his failure to fulfill his campaign promises and instead wrought havoc on the poor sector with the implementation of the TRAIN law.

The group said the “TRAIN wreck has caused untold sufferings on the poor, caused higher inflation resulting to the prices of even the most basic commodities such as rice, fish and all the Bahay Kubo vegetables increasing dramatically.”

It added that “joblessness has risen and nothing has happened to their much ballyhooed Unconditional Transfer Program. The daily 6 pesos given to a family of 5 is hardly assistance at all, it is an unconditional insult to the poor.”

The group recalled that when Duterte became president, “he promised the poorest of the poor, the most vulnerable sector of our society, that its assistance to them will no longer be conditional but rather be an Unconditional Cash Transfer Program, a dole out in the truest sense.’’

But after two years, they said, the DSWD has failed to provide cover to the 10 million families that the DoF already stated that will be adversely affected by TRAIN.

“Social protection is meant to provide safety nets for the vulnerable sectors of society but we have not seen any coming from this government. On the contrary, not only has TRAIN further exposed them to risks such as hunger and horizontal violence, its implementation has made the poorest families even more buried in hardship and hunger. In short, the lives of the poor have DUTERIORATED under this callous regime,” the group’s statement said.

“This government’s calumny and their callous statements are not in short supply, Secretary Diokno called the poor “crybabies” and admonished them that one will never go hungry if one works hard, even while the jobless rate has gone up. Neda Secretary Pernia, with unerring indifference, told us to tighten our belts since inflation is already here, conveniently ignoring that inflation has gone up since the launch of Duterte’s TRAIN. DOF Secretary Dominguez arrogantly claims that inflation is a sign of a robust economy, conveniently forgetting that the Aquino administration was able to grow the economy while managing the inflation rate.’’

"Mga manhid talaga itong mga alipores ni Duterte,” it added.

The group also admonished the various government agencies, telling them to work hard and stop fooling the people.

“Isa lang ang masasabi namin: magtrabaho kayo, tigilan ninyo ang panloloko sa mahihirap at huwag kayong manhid,” the group said.

The statement said that Tindig Pilipinas will stage a die-in protest on July 5 (Thursday) at the train tracks of the PNR Train Station in Espana to symbolize the effects of the TRAIN Law on the public, especially the poor.

The die-in protest will be held at 10 a.m. before Tindig Pilipinas manifests its position on the government’s tax reform program. Several members of the urban poor sector are also expected to speak about the effects of the TRAIN Law on their livelihood.

Meanwhile, the IBON foundation claimed that the Duterte administration’s second full year in office “sees the people’s condition worsening and the need for genuine reforms even more urgent.”

The foundation said that “the government is, however, digging in its heels and pushing more harmful neoliberal measures that aggravate the people’s plight instead of implementing policies that overcome economic backwardness.”

“Filipinos struggle to cope with fast increasing prices and workers’ wages continue to erode. The National Capital Region has the country’s highest minimum wage but even this has eroded by about P17 since Duterte took office,/” it added.

Positive effect of Train Law according to Jasper Marie O. RucatCAGAYAN DE ORO CITY, September 5 (PIA) -- The positive effect of Tax Reform for Acceleration and Inclusion (TRAIN) law is not immediate but rather medium to long term.

Bureau of Treasury (BTr) Region 10 Officer in Charge - Regional Director Bienvenido V. Esmeralda Jr. explained during the Talakayan sa PIA on August 30 that the passage of TRAIN law does not assure immediate positive effect but medium to long term.

The immediate effect would be the increase in prices. 

From the amount generated from this law, 70 percent will go to the Build Build Build program which is a capital asset. “And you cannot feel today the benefit, this capital asset: bridges, roads, etc.,” he said. 

“We cannot just collect today and spend tomorrow and we don’t see any infrastructure improvement,” he added. 

Meanwhile, 30 percent of the collected funds from TRAIN go to social services. 

BTr is the custodian of government funds.

Esmeralda said the collection of Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) will go to the treasury to fund the republic.

If the government needs money, then we can provide, he said.

For 2018, the national budget is something like P3.4 trillion but the estimated revenue is P2.8 trillion.

He explained that if the P3.4 trillion will be spent, compared to the P2.7 trillion collection, the treasurer has to find somewhere to fund the balance or the deficit. 

"We always borrow," he said. 

In June 2018, the national government debt reached P7.1 trillion. “Bisan pa sa budget programming, duna gyud deficit pirmi (Despite the budget programming, there is always deficit),” he said.

"For TRAIN, the target inflation was between 2 to 4 percent, but for the month of July, we hit 5.7 percent that is over and above the inflation rate target," said Esmeralda. 

"When price increases," he said, "we cannot just blame TRAIN law because there are other factors."

Among them are rise of fuel price in the world market and depreciation of the Philippine peso. (JMOR/PIA10)

5 Reasons Why the Tax Reform Law is Good for Us 

Starting in the first payday of 2018, some six million Filipino workers should see an income tax reduction in their payslip, thanks to the newly implemented Tax Reform for Acceleration and Inclusion (TRAIN) Act.

The TRAIN law or Republic Act 10963, which took effect on January 1, 2018, is the first of five tax reform packages for a simpler, fair, and efficient tax system.

Essentially, TRAIN lowers personal income tax, simplifies the estate and donor’s tax, and expands the value-added tax (VAT) range. On the other hand, it increases excise taxes on fuel, mineral products, vehicles, and cigarettes. It also imposes new taxes on sugar-sweetened beverages and cosmetic procedures.

Revenues collected from TRAIN will fund the government’s infrastructure and socio-economic programs.

What does this mean to an ordinary employee like you? Is it good or bad news? According to the government, the benefits of tax reform will outweigh the effect of price hikes resulting from the higher excise taxes.

That remains to be seen. For now, be hopeful and look at the good effects of this new law on your personal finance.

1. Higher Take-Home Pay Since the time you received your first-ever salary, you’ve been dreading to check your payslips. It really hurts to see huge taxes being deducted from your hard-earned money.

Now, you can heave a sigh of relief because if your gross monthly salary is PHP 21,000 or less, you will no longer be taxed.

Under the TRAIN law, those with an annual taxable income of PHP 250,000 are exempted from income tax payment. Around 83% of taxpayers in the Philippines will benefit from the tax exemption, as reported by the Department of Finance (DOF).

The income tax rate for Pinoys earning above PHP 250,000 per year will be 20% to 35% from 2018 to 2022 and 15% to 35% from 2023 and beyond.

Before the tax reform implementation, those with over PHP 250,000 to PHP 500,000 annual income had to pay 30% tax. Those earning over PHP 500,000 had a tax rate of 32%.

A lower income tax means higher take-home pay for 99% of Pinoy taxpayers. This also means additional disposable income that you can use to manage your finances better, like investing your money, buying a life insurance, and paying off your credit card debt.

To check how the new tax reform program will affect your income, you can use the DOF tax calculator. This online tool also computes the impact of excise taxes and VAT on your income.

2. Fair Tax System

Above-minimum wage and middle-income earners (who had a high tax rate of 32%) will benefit the most from the TRAIN law, said tax expert Raymond Abrea in a GMA News online report.

According to the DOF, the new law will lessen the tax burden of the poor and the middle class, passing it on to the higher-income earners who comprise 0.1% of taxpayers in the Philippines. Those earning more than PHP 8 million annually will pay a higher maximum tax rate of 35% (previously at 32%).

Prior to TRAIN implementation, economists criticized the 20-year-old Philippine tax system under the National Internal Revenue Code of 1997 for being unfair to the Filipino middle class. The Philippines had the second highest income tax rates in Southeast Asia and seventh in Asia, according to the Joint Foreign Chambers of the Philippines.

3. Higher Tax Exemption Cap for 13th Month Pay

 From PHP 82,000, the tax exemption ceiling for 13th month pay and other bonuses is now at PHP 90,000. Especially those with total bonuses (including 13th month pay) of over PHP 82,000 can have more money to spend and save during the Christmas holidays.

4. Simpler Tax Filing and Payment

Computing the estate tax and donor’s tax used to be very complicated with different rates. In the old tax code, the estate tax rates ranged from 5% to 32%, and the donor’s tax ranged from 2% to 30%. Under the new tax reform law, the estate and donor’s tax will have a single, fixed rate of 6%.

For all other tax types, tax compliance is now simpler and easier. Here are the notable changes to the tax filing and payment process under the TRAIN law:

• Optional flat 8% tax rate on gross sales or receipts not more than PHP 3 million (for self-employed professionals and small businesses) that can be filed and paid annually or quarterly instead of monthly or bi-monthly payments of business and income taxes
• Filing of tax return for final withholding tax to be done quarterly rather than monthly
• Filing of VAT Return and tax payment to be done quarterly rather than monthly from 2023 onwards

5. Higher VAT Threshold and New Exemptions 

TRAIN raises the VAT threshold from PHP 1,919,500 to PHP 3 million. Goods and services sold by small and micro businesses such as sari-sari stores (with total annual sales within or below the VAT threshold) are exempt from VAT. This means no tax is passed on to buyers, lowering the prices they have to pay when buying from these businesses.

The new law also expands VAT exemption for certain people and products, including the following:

• Senior citizens
• Persons with disability
• Raw food/agricultural products
• Tourism businesses
• Medicines for diabetes, high cholesterol, and hypertension (from 2019 onwards)
• Health and education
• Renewable energy (zero-rating)
• Homeowner fees (e.g., association dues, membership fees, etc.)
• BPO companies within special economic zones

Therefore, The tax reform law may not be perfect, but it does provide a lot of benefits to the low and middle-income classes. More money in your pocket, though, doesn’t mean you should upgrade your lifestyle, too.Be wise in managing your finances—remember that prices of some goods will go up as a result of increased excise taxes. Save and invest your extra take-home pay, and spend less on the non-essentials. Time to quit smoking and drinking soda, perhaps?Looking for a financial product? Click the box below to connect with our financial advisors

References:

http://davaotoday.com/main/davao-city/train-law-is-a-burden-not-a-gift-critics/

https://www.rappler.com/thought-leaders/192873-train-tax-reform-law-what-does-it-change-explainer

https://steemit.com/philippines/@smaeunabs/train-law-and-its-counter-effects-to-filipino-consumers

http://manilastandard.net/news/national/269703/group-claims-train-law-wrought-havoc-on-poor-sector.html

https://pia.gov.ph/news/articles/1012433

https://pia.gov.ph/news/articles/1012433

https://www.moneymax.ph/blog/tax-reform-law