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A win for all

By Dr. Ramon Ricardo A. Roque, CESOI, Diplomate

The Tax Reform for Acceleration and Inclusion (TRAIN) Law is now in effect and news about it appears to be more on its negative effects. Like any other tax measures, there are winners and losers in the TRAIN Law implementation.
The Law does not only benefit those who are earning R250,000.00 and below because of their income tax exemption but also all Filipinos because in the long-run, we will reap the rewards of the Build, Build, Build Program of the Duterte Administration that will be funded from the additional taxes that will be collected.

We should all look at the additional taxes that Filipinos pay as an investment for the growth of our economy.

As all Filipinos have a stake in our country’s economic growth, we should all give our equitable share of the “burden” – the cost of realizing such growth.

One of the lesser good features of the law that is not highlighted in news reports is the equitability in the tax responsibilities of Filipinos.

Let’s face the fact that our tax system before the TRAIN Law is not equitable because the salaried citizens are the ones paying for most of the cost of government operations and services while those in the so-called underground economy did not have to let go part of their income to pay for their share in the public funds needed by the government.

The TRAIN Law, among others, shifts the tax focus from income to consumption and it thus makes the carrying of the tax burden equitable for the salaried taxpayers and those in the underground economy. Those who earn not more than R250,000.00 per year and those who were not really paying income taxes now have to give their respective shares in the public coffers through the taxes they will pay based on their consumption of goods and services.

Those in the underground economy are against the TRAIN Law because they will now have to carry the burden of the additional excise tax on many of the goods that they consume. Before the TRAIN Law, salaried employees who were earning the same amount as those in the underground economy were in a disadvantaged position as they were forced by the tax system to let go of a percentage of their income as tax payment, which the latter did not (and still do not) have to do.

There are losers and winners now. The challenge for the Duterte Administration and the administrations that will follow is to use the increased tax collection in realizing economic development that will be a “win” for all Filipinos.

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