5. How will the TRAIN LAW affect Local Fiscal Administration?

Give
three (3) scenarios. In addition, would the TRAIN law have a major
impact on the ASEAN Economic Integration on the local level in the
Philippines. Provide two (2) examples.

TRAIN LAW affect Local Fiscal Administration on the following

scenarios:

1.) P 1.1 Trillion Tax Savings for Employees

Estimated Revenue Loss from Personal Income of the Revised

Package 1

Tax reform program package 1 is putting more money in people’s pockets:

1. Adjust brackets to correct income creeping – 99% of

taxpayers will face a rate of 25% or lower by 2019.
2. Shift to a simplified Personal Income Tax (PIT) system
– the introduction of a simplified system will reduce
avenues for tax leakages and avoidance.
3. Reduce PIT maximum rate to 25% over time, except
for the highest income earners to maintain
progressivity.
 The TRAIN will provide hefty income tax cuts for majority of Filipino
taxpayers while raising additional funds to help support the
government’s accelerated spending on its “Build, Build, Build” and
social services programs.
This tax reform package corrects a longstanding inequity of the tax
system by reducing personal income taxes for 99 percent of taxpayers,
thereby giving them the much needed relief after 20 years of non-
adjustment of the tax rates and brackets. This is the biggest Christmas
and New Year gift the government is giving to the people.

2.) High end revenue impact in 2018

Package 1 – Tax reform on Personal Income Tax and

consumption

Tax reform - Fiscal Policy Logic

 Shifting tax burden on (LOWER TAX RATES) to consumption (HIGHER

EXCISE taxes). This encourages savings, thus investments.
 Shift consumption to investments: 1% of GDP 2/3 to infra, 1/3 to transfers.
 Tax the rich, Benefit the poor: Progressive excise tax on petroleum will
finance income transfers to the affected lover income families
 Benefit first, Tax later: Investments in Public Goods. Reverse P1trn
underspending from 2010-016. K+12 fully funded (P78nb), free SUCs
(P8.3bn), universal Philhealth (P54bn) and free irrigation (P4bn) solely
finance by organic growth as new taxes yet to kick in
  Shared burden, shared benefits: Weakness is “benefits to lower 50%
dependent on bureaucratic efficiency, benefits to lower 50% is assured via
automatic tax (withholding) reductions”
 RVAT/reforms during PGMA provided shield against global economic
recession and increased structural resilience of the Philippines.

Note: 40% of the first year incremental revenue from oil or around 48
billion pesos will be earmarked to targeted transfers, pantawid pasada
and jeepney modernization, and the rest will be softly earmarked only to
investment, education, health, and social protection.

For the poorest 10 million households, the government is giving them

targeted cash transfers of PHP 200 per month in 2018 and P300 per
month in 2019 and 2020, sourced from higher consumption taxes that
the rich will contribute, as well as better social services, healthcare,
and education. All these will prepare the people for better job
opportunities.

3.) High % of Gross Domestic Product in 2018