• The TRAIN is coming!



    To welcome change is to welcome a chance for those who need most. That was essentially the theme of an advertorial I heard on radio seeking support for the administration’s comprehensive tax reform package.

    The Duterte administration hopes to generate at least P200 billion in new revenues in the next year and raise it further to P366 billion a year over the medium term through what it calls Tax Reform for Acceleration and Inclusion (TRAIN).

    That is a lot of money to raise while the government is lessening the withholding tax on personal and corporate income. Tough job for the revenue-raising agencies!

    The government wants us to believe that while we would have more money in our pockets because of lower withholding tax on income; our lives would improve owing to the huge amount of new money that would come in from other forms of taxes. These new money would then be used for its “Build! Build! Build!” infrastructure program aimed to put the Philippine economy on a soaring platform to high and inclusive growth.

    As much as we would like to believe those fantastic goals, we could not avoid being skeptical and critical of the promises of change for the better.

    We have seen more than enough examples of wasteful spending and bad governance, not just under this administration but in those who came before this as well.

    We were promised better transportation services with the acquisition of new train coaches for the Metro Rail Transit (MRT). The coaches have arrived but mass transit service has gone worse, with malfunctioning old trains and longer lines of passengers particularly during the morning and afternoon rush hours.

    We have seen a horde of public officials and unelectable consultants in junkets during overseas trips of the President, and the appointments of political animals with questionable track record in the positions they occupy. The public money spent on those junkets and salaries of unelectable appointed officials could have better been spent on, say, construction of classrooms in poor communities where children have to walk several kilometers to get educated.

    When President Dutete delivers his second state of the nation address before a joint session of Congress today, we could expect him to mention glowing achievements, if there were, in the last year, and make a litany of what he wants to achieve in the years ahead.

    For instance, he could dwell on how the weakening of the peso translated to more money in exchange for the foreign currency remittances of Filipinos overseas, but not on how it reduced the purchasing power of the beneficiaries in the country. While they may have more pesos in remittances, they needed more than what they used to get to buy the same things they used to buy because prices had gone up.

    Every administration’s priorities are almost always topped by a program to reduce poverty. But why do we get an impression that more people become poor as years pass by. Instead of the middle-income group inching up to the economic ladder, it seems to be moving down because of heavy tax burden.

    Now we are given the premise that the administration’s success in reducing poverty and transform the country into an upper middle-income economy by the end of its term in 2022 is anchored on the generation of P366 billion a year to fund its massive infrastructure program and investments in education, training, research and development.

    The tax reforms would be all right if it would indeed collect more from those who are earning more, unlike in the present complicated scheme in which fixed-income earners carry the heavy burden of taxation while professionals who charge exorbitant fees get to pay much less than low-salaried employees in government and the private sector.

    The country’s tax laws have not been updated for two decades and evaders have already perfected the art of avoiding paying the right amount due them.

    People who are earning more should have not only more money to spend but also higher tax payments. As it is now, people who earn more have more money to spend but paying less than they should because of the complicated tax system that allow them flexibility to avoid paying the amount due them.

    We can only hope that the planned tax reform, on which previous administrations have failed, would be fair.

    Legislators who voted against the TRAIN at the House last May said it is anti-poor because while it did lower personal income taxes, the public would shoulder the increase in prices of basic goods and services as a result of additional taxes on fuel and sugar-sweetened beverages, among others.

    We hope that the Senate will come up with safeguards to make sure that the TRAIN would not hit the poor in terms of more indirect tax burden, but collect from those who have more.

    The most attractive feature of the TRAIN is the lower tax rate for fixed income earners starting Jan. 1, 2018. However, the additional money taxpayers would get would actually just go for consumption taxes on products and services, and not end up in our pockets.

    Indeed, new or additional tax measures are bitter pills to swallow, but regardless of its taste, we would swallow it if we are assured that these would lessen the pains and aches that debilitate us.

    Government officials should be more prudent and judicious in public spending by making sure that taxpayers get better service in return for the taxes they pay.


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