The government’s unconditional cash transfer (UCT) program, a financial assistance scheme for poor Filipinos will get an additional P12 billion in the 2019 national budget that will cushion the impact of the Tax Reform for Acceleration and Inclusion (TRAIN) on low-income families.
The amount will directly benefit 10 million poor households, said Albay Rep. Joey Sarte Salceda, UCT’s original proponent and principal author of the TRAIN measure in the House of Representatives.
The additional amount brings to P36 billion the UCT outlay from 2019, Salceda said. Its beneficiary families, which constitute the lower half of the poorest Filipinos, will receive an additional P300 monthly, higher than the P200 they got in 2018 under the program.
The UCT outlay was first proposed by Salceda in House Bill 4688, the first TRAIN bill, as an income transfer to the poor from the high-income families. It is designed to result in a positive income increase for the lower half of the lowest income Filipino families.
The Albay lawmaker said the additional UCT would more than offset the tax impacts under TRAIN, resulting in a +6.7 percent income hike for the lowest 10 percent of the population after considering the estimated TRAIN impact on the poor’s consumption.
This will be funded from the proceeds of the increased tax on oil, 54% of which is consumed by the top 20% of Filipinos, and other taxes are borne mainly by the top income classes, said Salceda, also a noted economist.
“The UCT is a legislative breakthrough as it is a precursor to a universal basic income regime where low-income segments of society are assured of financial means by the state to access their basic needs without restricting their choices or their consumption preferences,” he said.
“Conceived as a safety net policy reform, the UCT, however, can very well be a major instrument of the state for social justice, given the coincidence of inequality and growth under a globalized market-based private sector-driven economies,” he added.
TRAIN is the first package under the Duterte administration’s Comprehensive Tax Reform Program, which among others, slashes personal income tax (PIT) rates for those earning below P2 million and provides for simplified and lowered rates for donor and estate taxes.
UCT differs from the pre-existing conditional cash transfers or CCT program, also known as Pantawid Pamilyang Pilipino Program (4Ps), in that it doesn’t require beneficiaries to comply with specific conditions to be eligible for the financial aid.
Salceda said UCT targets 10 million families or 50% of the lowest-income households, including the 4.4 million families already enrolled in 4Ps, some 3 million indigent senior citizens already receiving social pensions, and 2.6 million poor families with no children in school.
He said UCT is among the most urgent reasons why Congress is determined to pass the 2019 national budget that hit a snag in the bicameral deliberations.
It is a mechanism he proposed to shield the poorest of the poor from the impact of the TRAIN’s initial implementation, among them the forecasted rise in the cost of prime commodities.
“It’s all water under the bridge now, however, since we can heave a sigh of relief that the poor ― among others ― will benefit from the new national budget,” he added.
The TRAIN law, Salceda pointed out, also contains revenue-enhancing schemes to offset the projected revenue loss from the PIT cut and support the government’s increased spending on infrastructure and human capital development.