Tax Reform Bill: Gains and Losses for Ordinary Taxpayers
IS IT giving with one hand and taking with the other?
The House of Representatives approved House Bill 5636 or the Tax Reform for Acceleration and Inclusion (TRAIN) on its third and final reading on May 31. A total of 246 lawmakers voted for the bill, nine were against and one abstained. TRAIN aims to exempt Filipinos with a monthly income of P20,000 and below from paying personal income tax. However, it adds to the value added tax (VAT) on covered goods and services an excise tax for sweetened beverages, oil and gas as well as estate and donor taxes.
The House endorsed the bill to the Senate which is currently holding public hearings on proposed tax issues — the first of four tax reform packages of the Duterte administration. Officials from the executive branch claim that together these tax laws will simplify the tax system and make it more equitable, while raising the funds to support government’s development plans, particularly its infrastructure program.
But critics have tagged the bill as “anti-poor.”
CMFR cheers GMA-7’s Saksi for looking into the gains and possible losses of minimum wage earners in the approval of TRAIN. The report asked, “Alin ang mas malaki kapag ipinatupad ang tax reform bill: bawas-tax o dagdag-presyo? (Which is higher once the tax reform bill is approved: reduced income tax or price increase of goods and services?)”
Aired on July 7, the three-minute report compared the savings and expenses of a couple in Quezon City earning less than PHP400,000 annually to their savings once the tax reform bill is approved. Individually, the couple will be exempted from income taxes. Using the tax calculator by the Computer Professionals Union, each of the couple will have an additional expense of PHP807 per month or a total of PHP9,684 per year. The computation is based on 12 percent VAT for house rental, 1.6 percent projected increase on the price of food items, 10.5 percent on LPG, 1.1 percent on electricity and 1.9 percent on transportation. At the same time, the tax exemption will gain the couple a combined savings increase of up to PHP44,216.
The report noted that the computation does not include the exact cost of the possible domino effect on the price of basic commodities: for example, the price of fuel that may affect the cost of energy, transport and delivery services.
Ibon Foundation economist Sonny Africa was interviewed saying that the government should explain all the positive and negative effects of the bill.
The report also included the assurance of Assistant Secretary Paola Alvarez of the Department of Finance that the government will implement stricter price watch and a “price freeze” to avoid profiteers.
Saksi’s effort gave the picture of how minimum wage earners will fare in the event TRAIN is approved. The report clearly showed that people getting basic pay will gain more from the bill for so long as the excise tax does not trigger high inflation.