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Stop the TRAIN?

The Department of Finance (DOF) was quick to explain and defend TRAIN not to be blamed for the 4.5 percent inflation. Supported by the National Economic and Development Authority (NEDA) and Bangko Sentral ng Pilipinas (BSP), DOF clarified that TRAIN accounted for only 0.4 percentage points of the 4.5 percent.

This means, “if you could buy items for P100 last year, you need to spend P104.50 now for them and of that increase, only 0.40 (forty centavos) was due to TRAIN,” said DOF Usec. Karl Chua.

According to DOF, inflation rose mainly because of local and global factors i.e., rise in global oil prices, weak peso, rice shortage among others.

Although the Department of Trade and Industry (DTI) confirmed impact of excise tax on oil and petroleum products, sugar and tobacco on prices of other goods, DTI said it’s minimal.

But the issue on inflation should not come as a surprise, as it was debated during the deliberation of TRAIN in the Senate and the government assured our legislators of 2-4 percent inflation only, not 4.5 percent.

Granting all their explanations are correct, it may still not be sufficient to pacify the 50% poorest of our population as they have not yet received the subsidy promised by TRAIN law.

This brings some of our legislators and various sectors to call for the suspension of the TRAIN law particularly on the additional excise taxes on petroleum. However, suspension will not mean there will be a price rollback as it would only stop the next scheduled increases.

 

In short, prices will remain high, and the poor will continue to suffer even if the government decides to suspend the TRAIN law.

But the Social Weather Station (SWS) survey for the first quarter reported both self-rated poverty and hunger index fell. “This indicates that price increases are still moderate and that living standard are improving, most likely due to higher income from TRAIN and better jobs,” Usec. Chua said.

Economists may know better, but the government must ensure full implementation of the TRAIN law if it insists on its overall benefits as the poorest of the poor cannot wait for the long-term impact of “Build, Build, Build.”

I urge the Department of Social Welfare and Development (DSWD) to release unconditional cash transfer (UCT) of P2,400 to 10 million poorest households as it is part of the social mitigating measures to protect the poor.

There is no acceptable reason for the delay as the new taxes were imposed last January 1, 2018 and prices increased immediately on the first month of its implementation.

Delaying the subsidy will hurt the poor even more, as life is already difficult for them even without TRAIN.

As a tax advocate, I feel equally responsible as I supported the TRAIN law, the Comprehensive Tax Reform Package (CTRP) of the government.

Aside from UCT, fuel vouchers should be given to qualified franchise holders of Public Utility Jeepneys (PUJs) which will compensate the increase in excise taxes of petroleum products. For minimum wage earners, unemployed and the poorest 50% of the population, they should be receiving a 10% fare discount from all Public Utility Vehicles (PUVs), discounted purchase of NFA rice from accredited retails stores (10% of the net retail prices, up to a maximum of 20 kilos per month), and free skills & training under a program in Technical Education and Skills Development Authority (TESDA).

But the private sector must not just watch and see. Companies are morally responsible for the welfare of their employees (and their families). While the government is subsidizing the poorest of the poor, businesses must extend financial assistance to its employees especially to the minimum wage earners.

Our tax law provides for non-taxable de minimis benefits e.g., rice subsidy, laundry allowance among others, and tax-exempt incentives which will help employees to be more productive.

As former Finance Secretary Dr. Jesus Estanislao always reminds us, governance is a shared responsibility.

If we want to push for a genuine tax reform, we have to address inefficiencies in our tax system worsen by a very narrow taxpayer base and low voluntary compliance. Tax administration is key to implement tax policy reforms, while tax education and compliance of taxpayers are indispensable if we want to collect the right taxes.

I laud the current tax administration led by Commissioner Caesar “Billy” Dulay for its relentless effort to simplify and streamline tax compliance making it easier for taxpayers to pay taxes.

Keeping in mind the goal of the CTRP – to make our tax system simpler, fairer and more efficient, the task for the Bureau of Internal Revenue (BIR) is not easy as they have to catch up with the new laws and technology to make sure they hit the ambitious revenue target year on year.

The Center for Strategic Reforms of the Philippines (CSR Philippines), a non-profit organization working as advocacy partner for both BIR and DTI to promote ease of doing business and paying taxes, CSR Philippines promotes youth entrepreneurship, tax education and reform, and the Seal of Honesty (SOH) certification program.

Revenue Memorandum Circular 60-2017 announced the official launch of the SOH Certification Program that will help taxpayers to become more honest in paying the right taxes, thus helping the government collect more taxes while promoting integrity and honesty amongst taxpayers. Visit www.sealofhonesty.ph for more information.

While SOH attracts medium and large corporations to help them get rid of their BIR problems especially during audit and investigation, the very narrow taxpayer base and low compliance are among the self-employed and professionals (SEPs).

In partnership with the Tax Whiz Academy, another game-changing development will help improve the experience of the taxpaying public specifically the SEPs. This is a work-in-progress with the BIR but will surely address these issues by bringing tax filing & payment at the convenience of your mobile phone.

With the TaxWhizPH mobile app, SEPs may file and pay anytime, anywhere without any hassle.

You will not need to line up and go under the scorching heat of the sun just to go to BIR and the bank to deal with your taxes. For Android users, you can already download it now via Google Play Store while iOS users can expect it to be downloadable via App Store before the second quarter ends. Subscribe now at app.acg.ph to get updates about the mobile app.

Amid the issues on Package 1 of TRAIN, we need to also be vigilant on the passage this year of the Package 1B which is about the General and Estate Tax Amnesties and Package 2 which is the lowering of corporate income tax and rationalization of fiscal incentives. These are equally important in our tax reform agenda as we need all aspects to be considered if we want to achieve a genuine tax reform. Pushing for these packages will encourage voluntary compliance as well as attract more foreign investments.

If your business organization is interested to know more about TRAIN Package 1 and how the Package 1B & 2 would eventually affect the business landscape and how you can cope with the changes, send us an e-mail at consult@acg.ph or call (02) 372-5727. Visit www.acg.ph for more information.

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