spot_img
27.2 C
Philippines
Tuesday, April 16, 2024

Pros and cons of TRAIN

- Advertisement -

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 order. 

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.  

- Advertisement -

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 with.

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 city. 

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 unnecessary.  

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. 

- Advertisement -

LATEST NEWS

Popular Articles