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TRAIN is decidedly pro-poor

By: Johnny Dayang

Contrary to misperceptions, proponents of the Tax Reform for Acceleration and Inclusion (TRAIN) bill, the government’s comprehensive tax reform package, assure the measure is “decidedly pro-poor and best balances the country’s tax system, while raising much needed revenues for public spending in infrastructure and in the people.”

The House approved TRAIN version consolidated Albay Rep. Joey Salceda’s HB 4688, Quirino Rep. Dakila Carlo Cua’s HB 4774 and several others. It adopted the title and most provisions of Salceda’s bill and the Department of Finance proposals.

Cua and Salceda are chair and vice-chair, respectively, of the House Ways and Means committee. They are optimistic the Senate will smoothly enact its TRAIN version, like the House which recently approved it overwhelmingly, 246 – 9 with one abstention. They predict it will finally hurdle the Bicameral committee by September.

Salceda said TRAIN will deliver a P354 billion monetary impact annually, P170 billion of which represent direct transfer from the rich to middle and low income households. It is seen to “help resolve income inequality between the poor and the elite, reduce poverty, grow the economy and further enhance the country’s credit rating and global competitiveness.”

TRAIN will overhaul the country’s personal income tax (PIT) system. Effective 2018 to 2020, taxpayers earning up to P250,000 a year will be tax exempt while those earning more will pay a basic tax plus an additional percentage on earnings above their set income brackets. Those earning over P5 million, for instance, will be taxed P1.45 million plus 35 percent in excess of P5 million. There will be slight adjustments starting 2021.

TRAIN hikes excise taxes on oil and vehicles, expanded the value-added tax (VAT) base, and tax sweetened beverage and lotto winnings, but retains VAT exemptions for senior citizens and disabled persons, and various cooperatives. It will increase state revenues to support massive government development programs, generate inclusive economic growth and ultimately benefit the poorest families.

As pointed out, “only TRAIN could make our tax system more efficient, equitable and pro-poor, since government cannot exclusively tax the rich because such measure would be struck down as class legislation.”

DOF now wages an extensive TRAIN information drive to promote accurate understanding of the measure, with some 107 presentations with various groups nationwide. Salceda said he has clarified the most asked questions about the measure during those events.