This position paper was written by me and my groupmates during the Regional Mass Training for Senior High School Teachers last February 2018.
TRAIN Law: A Railroad Trip with Benefits
A Position Paper
Filipinos cross a new route in terms of tax law as the Tax Reform for Acceleration and Inclusion Law commonly known as TRAIN Law was implemented in the beginning of 2018. President Rodrigo Duterte signed last December 19, 2017 the law identified as Republic Act 10963 which the primarily aim is to make the tax system simpler, fairer, and more efficient. This makes a departure on the previous tax law that was used 1997.
The law enacted to support the “Build, Build, Build” program of the current administration. The president envisions establishing mega infrastructures needed for the country to progress. Moreover, the government wants the mass to be the primary winners in terms of net take home pay and services catered for them. However, every law creates different impacts in various sectors of the state where some common Juans are left in the station of bewilderment on whether the reform is dire needed. Does the law really bring the nation safe towards prosperity and security?
The argument of this paper is to present the idea that the TRAIN Law is beneficial and timely.
President Duterte is sincere to his promise that the employees will have a better remuneration. Starting the payday in January this year, over six million or 86% of compensation earners with taxable income of 685 pesos per day or 20,833 pesos per month and below are exempted from paying their personal income tax.
For an instance, a public school teacher with the ranked of Teacher I only receives starting basic salary of 19, 620 pesos and used to take home a total of 15, 197 pesos, net of the mandatory contributions last year. TRAIN and the third tranche of the salary standardization law makes a Teacher I receive 20, 197 pesos as basic salary which is exempt from income tax. After deducting the mandatory contributions, he/she will get to take home the full amount (dof.gov.ph).
Presidential Spokesperson Harry Roque elucidated that the law simplified taxes for small tax payers including self-employed professionals with the payment of flat tax of 8% on gross sales on-receipt instead of income and percentages taxes which one filed once a year which is in terms of income tax.
TRAIN also adjusts estate, donor, and Value Added Tax. Roque said that, “Taxpayers would now have to pay a fixed rate of 6% for the net estate with the standard deduction of 5 million pesos.” He also added that donors’ taxes is at 6% fixed rate over and above 250,000.00 pesos yearly. He also mentioned that the law may revoked 54 special laws that provided non-essential VAT exemptions.
On the other hand, there is the increase on some commodities and services. This is evident on higher prices on fuel, electricity, vehicles, tobacco and other products and services because these have additional taxes.
There is also an increase in Documentary Stamp Tax (DST) and on dollar deposit. The DST is a tax-levied material which is used on legal documents and papers. The dollar deposit gain is also affected (filipinotimes.net).
To address the problems, the paper presents viable solutions. In the case of the gains that are wiped out because of higher prices on goods, fuel, and electricity, the Filipino must be financial literate. Based on a Standard and Poor (S& P) Global Financial Literacy survey conducted in 2015, there are only 25% percent of adult Filipinos who are financial literate (Manila Times, 2014). Based on a worldwide financial literacy index, Philippines ranked 68. The Asian Development Bank showed in a study that the Philippines has no national strategy for financial education (PowerPinoys.com, 2017).
This statistics is alarming but realistic, as million workers need to support the needs of family households first —- leaving banking as least priority. To make this possible, the government should relax the banking policies so that many will be encouraged to save their extra take home pay they incur. Also, there should be easier ways to invest. These things will lure more people to manage their finances.
As the nature of TRAIN Law is consumer- based, people should curtail their expenses. One should spend less on non- essentials. Buy and use products wisely. Luxury must be shadowed by the needs that are urgent.
The law is good for our health and environment. Many will be forced to desist smoking. Many will also cut their liquor consumption. People will also patronize public transportation, as some will refrain from using their cars. This will result to low carbon emission (MoneyMax.Ph, 2018).
The government is genuine to its promise to the underprivileged as it included subsidies in the law. There must be a thorough and transparent way to distribute the cash to the beneficiaries. There should be a database of the legitimate recipients and there should be trustworthy persons who will administer the system.
There should be more generation of jobs so that there will be more earners in the family. As the government promulgates law for free education in state universities and colleges (Placido, 2017) and the graduation of K to 12 education will transpire this year, the graduates should have more opportunities to reciprocate their hardship in studying the career they want to pursue.
To solve the higher amount of DST, the government should make the processing of documents systemized and fast. The faster the processing, the more time and money will be saved in the sides of the agency and people who transact for documents.
Despite the adverse side of the said reform, the law is pro-people. It has programs that will solve the predicaments of the people especially the unemployed like the giving of subsidies. The law is not a hole maker on our pockets but it is a regulatory on how people keep and spend their earnings. If all become responsible on how consuming power is exercised, all will really benefit from the law. The fear on this implementation should serve as a reminder that every cent earned and spent are significant.
The nation must abide on the law. The administration has a strong framework why the law was drafted and enacted. At the end, all have the democracy to choose on how the benefits will be utilized. Inflation and reform are inevitable in the economy therefore we must go with the flow. There is always a bumpy way in crossing progress. Being wise will help the Filipinos to have a smooth trip in life.
DOF (January 23, 2018). Tax Reform. Retrieved on February 10, 2018 from www.dof.gov.ph/taxreform/index/php/.
(January 13, 2018). 5 Reasons Why the Tax Reform Law is Good for Us. Retrieved on February 10, 2018 from www.moneymax.ph/blog/tax-reform-law.
Louren (October 10, 2017). Financial Literacy Philippines. Awareness 101-Power Pinoys. Retrieved on February 10, 2018 from https://powerpinoys.com>financial-liter.
Placido, D. (August 4, 2017). Who Can Avail of Free College Tuition Under New Law?. Retrieved February 10, 2018 from news.abs-cbn.com.
Pros and Cons of Tax Reform package Law in PH. Retrieved on February 10, 2018 from http://filipinotimes.net.
The Manila Times (December 2, 2015). Only 25% of Filipino Adults are financially literate. Retrieved on February 10, 2018 from www.manilatimes.net/only-25-of-Filipinos-financialy- literate-sp/232428/.