The poor and the middle class will spend more than the additional take-home pay that they are expected to earn under the Tax Reform, Acceleration on Inclusion (Train) bill passed by the House of Representatives on third reading on Wednesday night.
Citing estimates from the Department of Finance, Rep. France Castro of Alliance of Concerned party-list noted that those earning P5,200 to P47,000 per month will also have to shell out additional P952 to P7,400 per month as a result of the Train bill, which hikes excise taxes on all fuels by P6 to P10 per liter, among other additional taxes.
Those earning P112,000 to P2.7 million per month, on the other hand, will have to spend P13,000 to P135,000 more under the Train bill based on Finance department computation.
The Train bill also removed the Value Added Tax exemption for residential lots valued at P1.5 million and below; house and lot and other residential dwellings valued at P2.5 million and below as well as lease of a residential unit with a monthly rental not exceeding P8,000.
“This [Tax Reform bill] could shrink the middle class because aside from additional taxes on petroleum, the rental fees in apartments will also increase. Most of the lower middle class are the people renting apartments,” Rep. Teddy Baguilat of Ifugao said in a phone interview.
In addition, the Train bill also raised the excise taxes on sugar-sweetened beverages by P10 to P20 per liter.
“This is an issue of justice. A lot of workers, especially teachers, are overworked and underpaid. We have long been pushing for a lower income tax to enable these workers to lead a decent life. But this Train bill will run them over to the ground,” Castro said in explaining her no vote.
“The DOF [Department of Finance] data is clear: The monthly income of subsistence poor will go down by P1,189 while that of a middle class worker will go down by P13,652 monthly. The indirect taxes caused by fuel taxes will hit everybody because of the consequent higher cost of goods and services,” she added.
Rep. Carlos Zarate of Bayan Muna party-list said a professional earning P25,000 a month with three dependents (children) would have to shell out P29,828.80 annually or around P2,500 monthly because of the additional taxes caused by the tax reform package–a data also provided by the Finance department.
Under the Train bill, those earning P250,000 and below in a year are exempted from paying income tax.