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Commentary
July 3, 2017

TRAIN: TO BENEFIT MID- AND LOW-INCOME WAGE EARNERS

This discussion seeks to answer how TRAIN or Tax Reform for Acceleration and Inclusion will benefit the masses while being able to fund the infrastructure projects that were meant to boost the economy. Our guests were Commissioner Jose Gabriel “Pompee” La Viña of the Social Security System (SSS) and Atty. Paola Alvarez, Assistant Secretary of the Department of Finance (DOF).

During the “INSIDER EXCLUSIVE Kapihan”, a weekly show on PTV4, this was simulcast live in the following channels aside from DZRJ 810khz:

Explore TV Channel 17,
Fil Products Cable, Butuan City
Idol FM Legazpi City
DyMe Masbate
107.1 POWER FM Puerto Princesa Palawan.
97.1 WOW FM Roxas Northern Palawan.

According to Asec Alvarez, TRAIN seeks to benefit the economy by increasing the GDP growth from 6 to 7% for the next six years. That means by 2022, the Philippines will be a mid-income country, similar to Thailand and Malaysia. If the growth continues, by 2040 we shall be a high income country similar to Japan and Korea. For this to happen, we need to spend at least 8.1 Trillion in the next six years to fund the infrastructure projects that will affect health, education and social protection. Increasing infrastructure projects will boost businesses that need goods to be moved cheaply, efficiently and effectively from one place to another.

Regarding our income tax law, it was last changed in 1997. The highest bracket is 500,000 – that value then is different. Thus a person earning Php 21,000 (an entry level salary for some BPOs), is being taxed the same rate as 32% which is heavy. TRAIN seeks to benefit low-income earners especially those earning 250,000 annually. It exempts them from paying taxes. Those with an annual bonus of 100,000 will also be exempted.

For those earning minimum wage – they will have what we call social protection program on health and education that will shield them from excise taxes and broadening of the VAT base. They will be given a social benefits card.

Regarding excise tax on fuel, it was adjusted based on the inflation rate. Congress decided to stagger the increase for the next 6 years. The changes will be incremental. As for subsidies like the “pantawid pamasahe, pantawid kuryente”, we will do this by the modernization of the jeepney. A voucher will be given as a part of the pantawid pamasahe subsidy program affecting public utility vehicles. The upgrade will also result to having vehicles that will consume less gas. As Asec Alvarez explained, “Yung nacoconsume na fuel na hindi malinis, kumbaga yung mga Euro 2 pa lang yung engine nila, i-uupgrade natin yun para maging Euro 4, which is kalahati yung consumption ng gasolina atsaka yung kanilang body, chassis, mas magiging malinis ang jeepney kasi i-uupgrade natin. Maliban dito, magkakaroon tayo ng pantawid kuryente, yung matatamaan yung mga maliliit lang ang consumption ng kuryente. So marami tayong ginagawa na subsidy program. Yung poorest, yung 50 na mas mahihirap po talaga , sila yung may mga direct transfers kasi sa tingin po natin, sila talaga yung mangangailangan. So ishishield natin sila through direct transfers.”

Regarding those than can afford to buy their own vehicles, they are expected to pay higher taxes based on the market value of their cars. “So, sa mga automobile po, ang ginawa natin diyan, yung graduated din. Kunyari yung mga Vios, yung Mirage, mas mababa yung tax nila from 2 to 4 percent. Pero kunyari yung mga sobrang mahal na sasakyan. High end, luxury,” Asec Alvarez added. “Kunyari, yung mga Maserati, BMW, Mercedes, mas mahal po yung kanilang mga tax kasi kung nakakaafford ka ng mas mahal na sasakyan, dapat magbayad ka ng mas mahal na tax kasi mas mayaman ka eh. So dun sa lower-end vehicles, hanggang yung lagi nating ginagamit tulad ng Fortuner, Innova, yung ganyan po, yung mga nakaka-afford nito, sila yung mas makaka-benefit sa pagbababa natin ng income tax atsaka yung sa corporate income tax sa susunod nating packages. So yung sinasabi na kahit bigyan mo kami ng breaks sa income tax, mauubos pa rin kasi mag-aadjust ka sa ibang mga bagay. Hindi po totoo yun. Kasi mas magiging malaki pa rin yung take-home pay mo compared dun sa i-i-increase natin na revenue generating para ma-compensate yung irerelease natin sa income tax.”

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