Clash of Kawali - Top Leaderboard
Advertisement

TRAIN effects

President Rodrigo Duterte signed the first tax reform package, also known as the Tax Reform for Acceleration and Inclusion (TRAIN), into law on Dec. 19, 2017.

The TRAIN Law exempted minimum wage earners from paying personal income tax, broadened the tax base, and increased excise taxes. The implementation of TRAIN is expected to generate P130 billion in government revenues, which will be used for the Duterte administration’s Build, Build, Build infrastructure development program.

Our economy is currently not in its best state. In April, inflation reached 4.5 percent. Despite the good intention of the tax reform, we cannot deny that many Filipino consumers suffer from continuously increasing prices of basic commodities.

In a recent meeting of the Congressional Oversight Committee on the Comprehensive Tax Reform Program, the Bureau of Internal Revenue reported that in the first quarter of the year, the excise tax collection increased, particularly in petroleum products, tobacco, and sugar-sweetened beverages. In terms of personal income tax, the BIR was behind their target of P83.53 billion, as they collected only P60.18 billion.

When asked by the Committee on how the Executive can cushion the negative impact of the TRAIN Law, the Department of Finance said that P12.3 billion was released for the conditional cash transfer program under the Department of Social Welfare and Development from January to April this year.

The DOF, last week, presented the CTRP Package 2 before the House Committee on Appropriations. The second package of the tax reform seeks to reduce the corporate income tax rate from 30 percent to 25 percent, expand the tax base by 0.75 percent of the country’s gross domestic product, simplify tax rules for corporations, repeal special laws on investment tax incentives, and amend the Tax Incentives Management and Transparency Act.

I have been vocal about my stand on TRAIN even before its passage. I insisted on my revenue-neutral position. Simply, the government should only spend what it would earn. The rationale behind a revenue neutral tax reform scheme is that we need to strike a balance between our spending and revenue generation through taxation. As we increase excise taxes, the tendency is that prices of basic commodities also increase, wherein the cost is being passed on to the consumers. In effect, this cancels out the increase in the take-home pay of the taxpayers.

To suspend or amend the TRAIN Law is a decision left by the President to the Congress. To me, this is a serious problem that needs to be addressed urgently. As the Minority Leader of the House, I would be firm with my revenue-neutral stand, and I would encourage my colleagues to come up with measures that would manage the adverse effects of the TRAIN Law. We will continue to perform our oversight function to monitor the effects of TRAIN to ensure that it is for the benefit of our country.

Topics: Rodrigo Duterte , Tax Reform for Acceleration and Inclusion , Bureau of Internal Revenue , Minority Leader of the House
COMMENT DISCLAIMER: Reader comments posted on this Web site are not in any way endorsed by Manila Standard. Comments are views by manilastandard.net readers who exercise their right to free expression and they do not necessarily represent or reflect the position or viewpoint of manilastandard.net. While reserving this publication’s right to delete comments that are deemed offensive, indecent or inconsistent with Manila Standard editorial standards, Manila Standard may not be held liable for any false information posted by readers in this comments section.
AdvertisementGMA-Congress Trivia 1
Advertisement