Think Out Loud

Gregorio E. Baccay III, DPA

TRAIN for Life?

What is your take on the latest tax reform initiative of the Duterte administration dubbed as Tax
Reform for Acceleration and Inclusion or TRAIN?

For me, it is like a real train which transports group of people to a particular destination in a fast
and convenient manner. This for sure is the reason why the government chose the acronym TRAIN on this
tax reform measure – to provide the Filipino people with better lives and future. Last December 19, 2017,
after President Duterte signed the tax reform bill into law, which is now Republic Act No. 10963, he said
that 99 percent of the taxpayers will benefit from the simpler, fairer and more efficient tax system. He
also added that the law addresses long and overdue corrections in our tax laws and introduces a more
progressive tax system, where the rich and the poor contribute to give better services to our people. With
these in mind of the President, it was projected that by 2020, the poverty rate will be reduced from 26%
to 17% thereby uplifting about 10 million Filipinos from poverty, low income earners will achieve the
middle-class status. In addition, by 2040 the extreme poverty of the Philippines will be eradicated giving
Filipinos equal opportunities through inclusive economic and political institutions and achieve high
income status. What a wonderful place to live if these projections will come true. As responsible citizens,
let us take a ride of the TRAIN and experience what it offers us.

Supposing you have a gross annual income of P250, 000.00 (approximately earning less than P
21,000 a month) and you will be exempted from paying the personal income tax, how do you react?
Perhaps, you will be happy of course, because roughly you can save more than P2000 monthly. This means
more funds for the family. However, there were increases in the taxes of sugar sweetened beverages,
petroleum, automobile, tobacco, cosmetics, and among others, which offset the gains of the personal
taxes. For me, this move is empowerment. The government now gives more buying power to the Filipinos
and empower them to decide on what things to buy. But we cannot negate the trickle-down effect of the
increase in prices of various petroleum products in the coming months and for sure the poorest of the
poor will be affected. Thus, in order to protect the poor from the higher prices of commodities, the
Department of Social Welfare and Development (DSWD) was mandated to provide targeted unconditional
cash transfers to the poorest 10 million households at P2,400 per year in 2018 and subsequently P3,600
per year in 2019 and 2020.

But, what is the problem? I guess it is on the spending pattern of Filipinos caused by lack of
economic and financial education. Hence, the government in its quest of achieving financial inclusion
provides economic and financial education to all Filipinos. Indeed, capability building is necessary as
people need to be introduced to the concepts of economics, budgeting, savings, investment, retirement
planning, mutual funds, insurance and others. The conventional way of spending should be corrected into
a sound practice of including savings and investments in the monthly budget and hopefully in time,
become part of the way of life of people.

In closing, there are people who said that this measure offers more harm than good and some
even planning to sue the government for economic sabotage while others are seeking remedy in the
Supreme Court. Let all these happen, as the normal democratic process has taken its course. For now, it
is premature to conclude where the TRAIN leads us to.

Does it really bring us better life or perdition? Well, let us just wait and see.