We all envision a nation with equitable benefits for its citizens. We all aspire for utopia, an ideal and perfect state. But as the government continually reinvents itself to “respond to the people’s needs”, I think we are held hanging as to where we are really headed.
Implemented in January, Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Law (TRAIN) altered the tax structure. According to the Department of Finance, TRAIN is envisioned to finance the Build, Build, Build project of the Duterte administration to set up infrastructure that would enhance human capital and facilitate the ease of doing business in the country.
Education-wise, it seeks to alleviate the problem of teacher-to-student ratio and fund more public school facilities. An increased number of healthcare facilities is likewise expected by constructing more rural health units, provincial hospitals, and barangay health stations.
Proceeds from TRAIN will also fund development of major highways, expressways, and bridge upgrades. Through these developments, the President takes pride in saying that: “The law also addresses long and overdue corrections in our tax laws and introduces a more progressive tax system [where] the rich and the poor will contribute to give better services to our people.”
To achieve these aspirations, TRAIN will be levying more taxes in passive income (lottery winnings, interest income from foreign currency deposits, etc.), sweetened beverages, fuels, cosmetic surgeries, documentary stamp taxes, coal, automobiles, and increased amount of penalties, i.e. doubling the legal interest rate per annum.
Meanwhile, on the taxpayers’ side, the prices of prime commodities spiked because of the rising cost of diesel and gasoline that created a domino effect on the prices of other commodities. While many are now exempted from individual income (compensation and business taxes) because of the new tax brackets, minimum wage earners still have the same take home pay. With that same take home pay, they will now buy basic commodities at higher prices.
TRAIN promises inclusive growth for every Filipino citizen. This promise can materialize if we enjoy public goods and services such as improvements on education and health services, development of our public transportation systems, and overall government efficiency. But we will shoulder the burden of giving our share to feed the economy’s lifeblood.
Despite the queries if TRAIN is really equitable, the tax reform has already left the station and is starting to roll. Where to – to a destination, technocrats like to call “development”? Well, hopefully. But as we are off speeding on the rails, it’s time we started looking at the consequences of a speeding TRAIN.