At the start of January 2018, the TRAIN Law, or commonly known as Tax Reform for Acceleration and Inclusion immediately took effect. For some Filipinos, this law is a blessing as take-home pays and company bonuses increased depending on salary tax bracket. Personally, I can attest to this. I am earning less than 250,000 pesos a year (Yep, Civil Engineers aren’t paid that much), hence I am exempted to pay for personal income tax. I must admit, it really helped me a lot. That wage portion became an addition to my monthly savings.
Though this law is beneficial for some, not every Filipino is pleased to have this implemented, especially those who are earning a minimum wage, self-employed individuals, and small unregistered enterprises. As a whole, these folks are considered as informal economy since they are neither taxed nor monitored in the country’s overall economy census. Part of this sector includes small vendors, farmers, fishermen, PUJ and pedicab drivers, and contractual construction workers. Among others, these earners are having a hard time coping with the rising inflation of goods brought by the said law, and here are the main reasons why:
Excise tax on sweetened beverages. Aren’t you blown away by the recent soda prices? I remember buying a liter of soda last month which costs 35 pesos! It was only 23 pesos last year! What happened? Well, these sugared drinks are now taxed at 6-7 Pesos per liter depending on their sugar content. My family isn’t a great fan of soda and other sweetened beverages. We’re coffee addicts. Thankfully, milk, pre-packed coffee, and natural fruit and vegetable juices are exempted. However, most Filipinos couldn’t swallow their lunches well without having a sip of sodas. If they can’t afford it anymore, then there’s water with little to no cost at all. It’s a healthier counterpart after all.
Added tax in cigarettes too? I won’t complain! Cigarettes, from its base price, 30 pesos, rose to 32.5 pesos recently and this will continue to rise with an increment of 2.5 pesos per year until 2022. Aside from being a non-smoker and a smoke hater, my father is a cigarette smoker which I strongly condemn. I noticed how his cigarette consumption lessened during the implementation of SINtax years ago. I hope this time it will completely eliminate his addiction to cigarettes and I hope it will do the same with our fellow Filipinos.
More taxes for car owners. If you’re planning to buy a car, brace yourself for the doubled excise tax from 2% to 4% for cars having a cost of P600,000 and below. If you’re eyeing on a car having a worth over P4 Million, then be prepared for a tax up to 50% of the vehicle’s value from its previous 10%. Commuters can also experience adverse effects on transportation expenses due to a tax increase on petroleum products up to P8 per liter. Diesel, LPG, and Kerosene are also subjected to additional tax ranging from P1 to P3 per liter.
The above points are just a few of the counter effects of TRAIN Law. If we look deeper, the added taxes on merchandises such as sweet beverages and cigarettes may result on healthier lives for more Filipinos for they will be forced to trim down their consumption of these products which could be detrimental to health. However, additional taxes for cars and fuels could be burdensome for the Filipinos, both the car owners and commuters.
Along with the price hikes of the above-mentioned commodities, common goods such as rice, canned goods, and other grocery items are starting to have the bullish price trends as well. This caused a domino effect that even sidewalk vendors tend to increase their price lists to make their ends meet. This is the reason why several sectors coin this TRAIN Law as Anti-Poor Law for they believe only those who are middle to high earners could benefit from it.
What about you? Do think this TRAIN Law would be helpful in Philippines' overall economy? Let me hear your thoughts.
References:
Here’s What the TRAIN Law Means for Filipinos
