CHARLLOTE ALCALA

MSME STUDENT

REACTION PAPER ON TRAIN LAW

A bigger take home money by reducing personal income tax may sound too good to be
true but this is what Tax Reform for Acceleration and Inclusion (TRAIN) Law is intended to do.
For most of average Filipino employees, it is a good-for-nothing act due to the excise tax on
petroleum products, automobiles, sweetened beverages, cosmetic procedures, coal, mining and
tobacco. As an average Filipino employee and as a consumer as well, I’d like to react on the
individual effect of the TRAIN law to really understand how it works and if it is really effective
or otherwise.

I. COMPARISON OF 1997 TAX CODE AND 2018 TRAIN LAW

Photo Source: https://newsinfo.inquirer.net/957055/old-tax-rates-will-still-apply-for-personal-income-in-2017

As can be seen in the table above, for the 1997 Tax Code, an annual income of not over
Php 10,000 monthly is already taxable by 5%. This had greatly affected minimum-wage earners
for the past few years until 2018 after the implementation of the TRAIN Law. Upon the
implementation of the TRAIN Law, people who earn Php 21,000 monthly or less are actually
exempted from personal income tax. In my opinion, this is very helpful especially to my fellow
countrymen who needs to put more food on their plate and on their family’s plate. Imagine
bringing home some extra cash on a pay day, buying some cake or ice cream for your family,
and still managing to pay all your bills just because tax has been reduced. Or if you don’t want to
spend your extra cash from your salary, you can just save it. This reduction in personal income
tax can help every hardworking Filipino to have more for their family or to save more for their
future. Not only that, most of us will somehow feel the value of our hard work because we can
get more of what we have worked for. Come to think of it, almost all of the minimum-wage
earners are those who actually do physical labor works – construction workers, janitors, factory
workers. They are those who tire themselves up just to earn for a living. Getting more cash from
exhausting themselves would feel very rewarding.

II. COMPARISON OF PRICES BEFORE AND AFTER TRAIN LAW

The Department of Energy (DOE) has published in

their official website the oil price monitoring starting
January 2015 up to present. As can be seen in the table,
there was an abrupt change in the price of diesel and
gasoline between December 2018 and January 2018. Let
us recall that the TRAIN Law was implemented on
January 2018. TRAIN Law has put a huge toll on the
excise tax of petroleum products. This is the reason why
oil prices keeps on increasing. Unlike in 2017 and earlier,
oil prices were only at around Php 20.00 to Php 25.00 per
liter. At present, prices are almost doubled. This abrupt
increase in the price of oil has also affected the price of
common goods tremendously. Food and grocery items are
very expensive nowadays. Aside from the increase in oil
prices, the prices of goods are also increased due to the
increase in value-added tax (VAT) as per the implemented
TRAIN Law.

Data Source: https://www.doe.gov.ph/

This has greatly affected a lot of Filipinos especially those who are living in remote areas.
They don’t have malls nor supermarkets within their area. All they have are sari-sari stores.
These sari-sari store owners have to travel to the nearest supermarkets (or supply center) to buy
the goods that they can sell. Considering the travel expenses and the hassle the store owner needs
to go through, he/she can actually sell the goods at a much higher price. The burden is now
passed on the consumers of these goods. Those of our fellow Filipinos who are not only able to
buy enough food for their families but they are also having a hard time sending their kids to
school.
III. TRAIN LAW IN THE EYES OF VENDORS

IV. OVERALL REACTION

After all the factors that I have presented, I can say that TRAIN Law was not really
thought through and that most of our poor countrymen has been left out of the equation. A big
take home salary from reduced tax is nothing compared to the price hike in gasoline,
commodities, food and services. Also, not all of us are employees. How about the farmers? They
who provide us rice. They who would work nonstop under the heat of the sun just to make a
harvest after a couple of months. Philippines is an agricultural country but we import our own
rice. This is simply because we take our farmers for granted. Our farmers don’t have employers
to give them salary on a regular basis. They depend on their harvest. And sometimes, they are
not able to harvest anything due to typhoons and floods. Our farmers won’t get the advantage of
reduced personal income tax but they are included in carrying the burden of increase excise tax
from commodities. I think this is something our lawmakers must have thought about.
Furthermore, while TRAIN Law has offered employees a much higher take home pay by
reducing personal income tax, it has greatly affected our ordinary vendors – those who sell
cigarettes and candies along the roads or those who own a little store in their area. TRAIN Law
has also greatly increased the tax on cigarettes and liquors. Small-time vendors can’t purchase
that much for them to sell to the public. Let’s say a vendor can buy 5 packs of cigarettes a day
and sell it for 5 pesos per stick. With train law, he can only buy 3 packs (due to the increase in
price) and he should sell it at 7 pesos per stick, possibly decreasing his sales. How can ordinary
vendors keep up with the price hike? If this will go on, some of these vendors might lose their
way of living. How about their children that they have to feed, clothe and send to school? Let’s
face it, we are a third world country, which means most of us belong to the poor population. We
can’t simply ignore them and cancel them out in the implementation of TRAIN Law.

Our laws must not be focused on what is seemingly beneficial to the majority of the
population. It should be focused on the benefit of all the Filipino people, especially the
minorities. No one must be compromised. No one must be sacrificed. Because we are all Filipino
people, we have the right to enjoy the most of what Philippines has to offer.