TRAINABAHONG SAHOD: The Pros and Cons of Train Law
Train Law is the first package of Duterte administration's tax reform. It effectively affects wage earners, manufacturing companies and consumers.
The Train law originated from the House of Representatives through House Bill no 4774. The bill, which became the Train Act, was endorsed by the Department of Finance on September 26, 2016 as the first package of the wider Comprehensive Tax Reform Program. It was filed by the Legislature on January 17, 2017 by the Ways and Means Committee chairperson Dakila Cua of Quirino.
A Senate’s version was also filed by Senate President Aquilino Pimentel III on March 2017. Six public hearings were conducted by the Senate for their version and have to wait for House of Representative’s version is passed to start plenary discussions like on any bills on budget and Tax appropriations. The Senate voted 17-1 in favor of the Train Act
Bicameral Conferenrence Committee consolidated the versions of the House of Representatives and Senate’s version in which the committee has favored the latter’s version. On December 2017, the committee prepared a report after the ratification of both chambers and for signing of the President.
The Vision and Goal of Train Law are as follows:
It intends to simplify the previous system to make it more straightforward and intuitive,
It intends to create more “just” taxation scheme, wherein taxation is staggered and distributed on the basis of financial, and
It intends to improve the efficiency by which Tax is collected particularly tackling issues of compliance.[1]
I can still remember my professor’s welcome note during our first meeting in Taxation class when I was still in College. He said that “tax is the lifeblood of the State. Without Tax, government cannot perform its duty.”
After pondering such definition, I come to realize that it is truly important to have taxation in any state. Taxation is the act of laying Tax the process or means by which the sovereign through its law making body, raises income to defray the necessary expenses of the expenses of the government.[2]
Basing on the facts provided, the aim of this research is to educate people of the new law and its implications to our society. As a result, I have conducted an informal interview to some of my colleague to provide an insight and their understanding about this new law. Basically, I have asked them of what they think will be the Pros and Cons of this new Law.
We’ll start with the Pros of this new law. According to a group of ESL teachers, who are also wage earners, one good thing about Train Law is that they have much more take home pay than of the previous income tax scheme. This is also affirmed by Assistant Secretary Tony Lambino in his explanation to the show “Pros and Cons.” In that show, he elaborated that the purpose of this reform caters 3 major agendas. These are the following:
First, to increase the take home pay of wage earners.
Second, is for Infrastructure build up.
Lastly, for public health goals
To explain further, the first agenda talks about the increase of take home pay. Upon the enactment of this new law, new tax scheme was introduced and that is to raise the ceiling of taxable income. This will yield to exempt minimum wage earners and some to pay their tax dues.
Income Taxation is defined as the tax on the net income of the entire income received or realized in one taxable year. It is levied upon corporate and idividual income in excess of specified amounts less certain deductions or specified exemptions in cases permited by law.[3]
To further illustrate, compare the two tables presented below. By simply looking at it, you can really distinguish the difference of the two
The first tax table was used before Train Law. As you can see, if a person has an annual salary of less than or equal to P10,000.00 he is entitled to pay 5% of his salary as his Tax due.
Whereas when the Train Law was implemented, a person whose annual income does not exceed to 250,000.00 is Tax Exempt as shown on the table below.
Second agenda talked about was the Infrastructure build up, in this case, all the taxes they earned from the taxes we have paid, it will be used to fund Government projects especially to Infrastructures for the betterment of the country.
The third agenda elaborated by Mr Lambino is the public health goals. Since there’s a change to the tax scheme of individuals, the concept of the new law transfers the burden to excise tax and no longer to individual tax. The most affected of the rise of excise taxes were the tobacco industry and sweetened good and beverages. Somehow, this belongs to health goal of the Train law because it lessens the tendency of diabetes and to lessen Air pollution.
Other Pros of this new Train law according to the data gathered are the following:
It promotes better distribution of wealth basing on the new tax table
It creates better environment since the burden was transferred to excise taxes like of cigarette and alcoholic beverages. Therefore, it minimizes pollution and crimes
Government funding is source most likely on the taxes imposed in the commodities and excise taxes and not anymore through individual tax contributions.
However, in any positive effects of a new implemented law there are also negative effects of this implementation. The people are asking: Is Train Law anti poor? In accordance to the consolidated answers I have gathered, since there is transfer of burden, the tax on almost all of our basic needs increases. One of the significant change that will automatically affect all prices is the rise in price of oil/gasoline. We all know that all of our necessities from its raw materials to its finished goods, produce from our farmers are transported from one place to another. Increase in the price of gasoline entails a rise of almost all goods we are acquiring. As its effect, our brothers and sisters will notice the changes in price due to the abuse of some vendors that uses Train Law as an excuse to increase the price of goods they are selling. But Assistant Secretary Tony Lambino in his defense states that Train law is not anti poor. Why? For the reason that it gives an that opportunity to people of higher take home pays. He further explains that the increase of prices nowadays is because of the Market Price of oil in the world market and and exchange rate and not because of Train law. In the statistics conducted by their team Train’s participation to the increase in price is only 25% of the increase.
He further states that the Government is now formulating an idea of how to deal with this foregoing inflation.
Therefore, Train Law does not in away will give benefit to all. It may be beneficial for some but for some may not. Government has a role to play also and that is to educate its people as to the implication/s of this new law and the whims of
Project Implementations:
A video - power point presentation was uploaded to my social media account to educate people of the basic concept of this Tax Reform.
She is Yang, a BPO employee who has read my
presentation uploaded in Social Media.
Another group of ESL teachers who have seen the uploaded file were Sab, Glenn and Yvonne.
And lastly whom I got the chance to have a picture with is a management accountant of a reputable firm, Tiffanny.
About the Author
I am Christopher Ian Laurente from Danao City, Cebu. I graduated Bachelor of Science in Management Accounting at University of San Jose - Recoletos. Currently, I am enrolled as a law student in my first year of fulfilling my dream to become a lawyer at the University of Southern Philippines - Foundation.
Eldest amongst three children, i spend my idle watching animes, surfing the net, and browsing my social media accounts. I also love cooking new food which i think is edible.lol
Citations:
[1] Tax Reform for Acceleration and Inclusion Act. Wikipedia, the free Encyclopedia, August 13, 2018, https://en.wikipedia.org/wiki/Tax_Reform_for_Acceleration_and_Inclusion_Act. August 15,2018
[2] De Leon, Hector, S., De Leon Hector Jr, M. The Fundamentals of Taxation. Rex Bookstore,2012 Ed.
[3] Dimaayo, Japar, B. Basic Approach to Income Taxation , 2005 Second edition
Note: Digital Photos and Illustrations from this blog are culled from internet sources and from government websites. Credits to the owners.