Tax Reform for Acceleration and Inclusion (TRAIN)

1. CONS

According to a paper from Energy and Natural Resource Market Reports, coal’s share will remain high at
about 32 percent of total energy consumption even amid strong opposition from environmentalists.

Read more: http://business.inquirer.net/243956/coal-remain-dominant-ph-energy-

mix#ixzz56u3JUj00 (January 12, 2018)

While the TRAIN law will surely bring in revenues, it will, however, impose higher taxes on fuel, cars,
tobacco and sugary beverages.

Based on available figures, the initial impact of on power rates will reach P0.04 per kilowatt-hour (kWh). It
will then increase to P0.07 per kWh if excise tax on coal reaches P150 per metric ton. Overall, the total
impact is P13.2 billion worth of pass-on charges to the consumers.

https://businessmirror.com.ph/power-consumers-should-brace-for-train-impact/

Critics of the TRAIN Act education in income tax is rendered meaningless by the tremendous increase in
the taxes to be imposed on consumer goods, prime commodities, medicines, electricity, and fuel. In
particular, the prices of gasoline and fuel products are expected to increase by three to four pesos per
liter.

In turn, the marked increase in fuel prices will trigger a corresponding increase in the cost of transporting
people and goods, which will inevitably increase the prices of practically everything else. Moreover, the
labor sector will demand an increase in wages, which will also add to the cost of manufacturing goods
and the delivery of services.

Since the additional tax will increase the selling price of every consumer product, the twelve percent value
added tax (VAT) currently imposed on every sale of consumer products will be computed against a higher
selling price, which will necessarily mean a larger VAT on the sale of what are already very expensive
prime commodities to begin with.

http://manilastandard.net/opinion/columns/hail-to-the-chair-by-victor-avecilla/256378/pros-and-cons-of-
train.html

The reality of Train is it gives income tax benefits maybe, at most, to six to seven million Filipinos but
imposes taxes on all 23 million Filipino families. That means the poorest 15 million families that have no
income tax benefits will pay higher taxes. - Ibon Foundation Executive Director Sonny Africa, Economic
Expert

Read more: http://business.inquirer.net/243644/economic-expert-warns-train-can-deliver-negative-effects-

economy-train-tax-reform-ibon-foundation-africa-dof-economics#ixzz56uJDyJ2i

Here’s a brief look at TRAIN’s negative impact as expressed by economic experts, as well as ordinary
workers and businessmen, according to Duran & Duran-Schulze Law (a law firm)

Inflationary effects of higher petroleum prices that are seen to mostly affect the bottom 60% of
households. The government aims to offset these effects with a “transfer scheme” that will allocate
around P30 billion from petroleum excise taxes to support the bottom sectors. This scheme has been
criticized, however, for being unsustainable – projected to last only one to four years – and a “logistical
nightmare.”

Excise taxes on sugar-sweetened drinks will burden the bottom sectors, particularly those who are
already tax exempt under the current taxation system, and therefore will not benefit from the lowered tax
rates

Higher property taxes due to higher property valuation

Investors who are looking to benefit from PEZA (Philippine Economic Zone Authority) incentives may be
discouraged by the removal or restructuring of some of these incentives

VAT on low-rental housing may lead to higher rental costs

For small businesses like sari-sari stores, being taxed on gross income rather than net income
(computed after expenses) can mean higher tax payments

http://www.duranschulze.com/proposed-tax-reform-philippines/

2. Question of constitutionality

Makabayan bloc from the House of Representatives, together with the National Union of Peoples’
Lawyers (NUPL), asked the Supreme Court on Thursday to declare TRAIN Law as unconstitutional. Their
action is anchored on the technicality of the said law claiming that ratifying the bicameral conference
committee report for TRAIN “despite the glaring lack of quorum.”

Article VI Section 16(2) of the 1987 Constitution provides that “a majority of each House shall
constitute a quorum to do business.”

In this case, however, petitioners said the lower house violated the law when it ratified the TRAIN bicameral
conference committee report with barely 10 to 15 House members present on the floor on Dec. 13, 2017 at
about 10:45 in the evening.

“Congress is bereft of authority or power to validly pass laws — especially anti-people ones widely
contested by the people such as TRAIN — when it brazenly disregards the quorum requirement, a very
basic rule of democracy and even elementary rules of order. What should always apply is the Constitution
and the so-called rule of law, not the Rule of the Railroad,” NUPL president Edre Olalia said.

Read more: http://newsinfo.inquirer.net/959244/news-train-tax-reform-nupl-house-of-representatives-

quorum-supreme-court-makabayan-bloc#ixzz56uiaSxvQ