KENT JOHN M.

ROQUE EUGENE BALINDAN

BSA – 2B INCOME TAXATION

Pros and Cons of TRAIN Law on Philippine Government, its People and the Economy.

The TRAIN Law otherwise known as the Tax Reform for Acceleration and Inclusion which was signed into law by President
Rodrigo Duterte on December 19, 2017 was the initial package under the Comprehensive Tax Reform Goal (CTRP) which has
goal of creating a tax system that is straightforward, unbiased, effective and efficient. According to the website of the
Department of Finance, “TRAIN corrects the longstanding inequity of the tax system by reducing income taxes for 99 percent
of income taxpayers, thereby giving them much-needed relief after 20 years of non-adjustment. It also raises significant
revenues to fund the President’s priority infrastructure programs to reduce poverty incidence from 21.6 percent in 2015 to
14 percent by 2022.” In addition, the incremental revenue of the TRAIN shall allocate 70% of its earnings to the development
of infrastructures in the Philippines under the Build, Build, Build Program and the remaining 30 % shall be allotted to social
services programs (e.g. Education).

The Advantages of the implementation of TRAIN LAW in the Philippines are as follow:

1. Lowered and Simplified Personal Income Taxes

 In the website of the Department of Finance, it is indicated that individuals who has an annual income of
PHP 250,000and below shall now be EXEMPT from paying PERSONAL INCOME TAX, while the rest of tax
payers, except the riches, will have a lesser tax rates ranging from 15% - 30% by 2023.
2. Simplified Tax for Small and Micro Self-Employed and Professional (SEPS) Tax Payers
 According to the DOF, “Small and micro SEPs now have the option to pay a simpler, flat tax of eight percent
on gross sales in lieu of the income and percentage tax. Taxpayers can save time falling in line and filing
and paying eight times a year to just four times a year.”
3. Unconditional Cash Transfers
 As stated by the Department of Finance, there is an allocated cash transfers of PHP 200 per month in
2019 and 300 per month in 2019 and 2020 to the TEN MILLION POOREST HOUSEHOLDS and Individuals in
the Philippines.
4. Simplified Estate and Donor’s Tax
 The DOF specified that the Estate and Donor’s Tax will have a reduction on the tax rates., from 20 % to a
single rate of six percent for the Estate Tax and from 15 % down to a single rate of 6% for the Donor’s
Tax.
5. Introduced Excise Tax on Sweetened Beverages
 “PHP 6 per liter for drinks containing caloric or non-caloric sweetener, and PHP 12 per liter for drinks
containing high-fructose corn syrup or combination. 3-in-1 coffee and milk, among others, are exempt.”
This is with accordance to the website of the Department of Finance.

The Disadvantages of the implementation of TRAIN LAW in the Philippines are as follow:

1. Increased Prices of Products and other services

 According to The Filipino Times, “Due to reduced taxes, the government need to make up for loss of
revenue. Because of this, certain good will have higher taxes. Buyers and consumers should expect higher
prices for fuel and gas, electricity, vehicles, tobacco, and other products and services. Though income
 taxes will greatly decrease for almost all employees, they would need to spend more money on things that
they might need.”
2. Increase in DST and Dollar Deposit
 In the website of The Filipino Times, it is stated that aside from the increased prices of goods, an increase
of 50% to 100% tax rates on special documents, papers, agreements, etc. except for property, savings,
and nonlife insurance had been encountered.
 “Foreign currency deposit units increased from 7.5 to 15-percent final tax on interest income. Capital
gains of non-traded stocks increased from 5 to 10-percent to 15-percent final tax on net gains only,”

In conclusion, the TRAIN LAW has a multifaceted vision for the improvement and simplicity of a new Tax Reform and its primary
purpose is to help ease the Filipinos and the Philippines in the context of Taxation however, it lacks proper implementation
and it was done in a haste thus resulting to a shock for the citizens of our country. In addition, the implementation of the tax
exemption for earners of PHP 250,000 and less annually is convenient for those who has permanents jobs for the reason
that they will now have a higher take home pay. In contrast, those workers who only has 6 months of contract will not be able
so suffice his / her needs because his / her salary can’t keep up with the price hike of the basic commodities which is the
result of the increase tax on Oil and Gasoline.

For my recommendation, I believe that the TRAIN LAW can really help the Philippines to be more effective and efficient in
utilizing its taxes but the Congress must see the micro and macro effects of a hasty implementation. I doubt that our country,
in its current state can keep up with the increased in price of goods, implementation of new taxes on sweetened beverages
and beauty products. I will not recommend the removal of the TRAIN LAW granted that the CONGRESS shall make a continuous
effort on creating amendments that will help in syncing the CURRENT STATE OF THE PHILIPPINES with the TAX REFORM FOR
ACCELERATION AND INCLUSION.