Kyee: Before we get into the specific effects of TRAIN Law, we should first

understand where it came from, why it was created, and what kind of law TRAIN is.

On December 19, 2017 in Malacanang, Former President Rodrigo Roa Duterte

signed into law Package 1 of the Comprehensive Tax Reform Program (CTRP), also
known as the Tax Reform for Acceleration and Inclusion (TRAIN) as Republic Act
No. 10963. The Law took effect on January 1, 2018.

The TRAIN aims to make the Philippine Tax System simpler, fairer and more efficient
to promote investments, create jobs and reduce poverty. Along with this objective the
CTRP also aims to raise revenues that will fund the President’s Build, Build, Build
Project that will sustain high and inclusive growth of the country; and finance
investments in our people through enhanced education, health and social services.

So now, what are the new taxes imposed under the Republic Act 10963?

There are several provisions of the National International Revenue Code of 1997 on
personal income taxation, passive income for both individuals and corporations,
estate tax, donor’s tax, value- added tax ( VAT ) excise tax, documentary stamp tax,
(DST) and tax administration among others. It likewise introduced new taxes such as
the excise tax on cosmetic surgery and sugar-sweetened beverages.

In these several provision that I have presented, there are some issues arises
especially to the new taxes imposed under the TRAIN Law, such as sweetened
beverages, and petroleum products. Now let’s discuss each new taxes and it’s
issue.

RA 10963 increases the tax rates on petroleum products, including oil and fuel, in
three (3) tranches, beginning January 1, 2018 to January 1, 2020. Note that
throughout the aforementioned time period, the products with the biggest excise duty
hikes are diesel fuel, liquefied petroleum gas, and bunker fuel (from P2.5 to P6.0).
According to a study conducted by the University of Diliman, an increase in the price
of gasoline followed by an increase in the price of goods is usually felt immediately
by the poor. 

Aside from the petroleum, the sweetened beverages also increased. According to
Leonardo (2018), Excise tax on sweetened beverages (SBs) is one of the new taxes
imposed under Republic Act (RA) 10963, or the Tax Reform for Acceleration and
Inclusion (TRAIN) Law, which took effect last Jan. 1 2019.

The Department of Finance (DOF) and the Department of Health (DOH) support this
as part of a comprehensive health measure to curb the consumption of SBs and
address the worsening number of diabetes and obesity cases in the country, while
generating revenue for complementary health programs that address these
problems.

SBs, as defined under the TRAIN Law, are non-alcoholic beverages of any
constitution (liquid, powder, or concentrated) that are pre-packaged and sealed in
accordance with the Food and Drug Administration (FDA) standards and that contain
caloric and/or non-caloric sweeteners added by the manufacturers. Simply put, these
are beverages that contain high levels of certain sugars that are viewed as providing
unnecessary or empty calories with little or no nutrition.

Unfortunately, the following drinks that we’ve come to love are now taxed under
Section 47 of the TRAIN Law: sweetened juice drinks and tea; all carbonated
beverages (e.g., soft drinks); flavored water; energy and sports drinks; cereal and
grain beverages; other powdered drinks not classified as milk, juice, tea, or coffee;
and other non-alcoholic beverages that contain added sugar. SBs are to be levied at
P6 or P12 per liter of volume capacity, depending on the type of added sweetener.

Now what are the advantage and disadvantage of having this TRAIN Law? To further
this discussion, the mic is yours, Ms. Abulencia.

Tax Reform for Acceleration and Inclusion Act brought and still brings many effects
nowadays in people's lives, on government, the economy, and peace in our nation.
Now let’s discuss it’s advantage and disadvantage of TRAIN Law.

What is the Advantage of TRAIN Law?

 The TRAIN was made to provide hefty income tax cuts for majority of Filipino
taxpayers while raising additional funds to help support the government's
accelerated spending on its "Build, Build, Build" (a flagship program that
generated jobs and fostered economic activities) and social services programs.

 It also raises significant revenues to support the president's priority social and
infrastructure programs, which will help realize his administration's goal of
reducing the poverty rate from 21.6 to 14 percent by 2022. Some 70 percent of
the incremental revenues will help fund the government's infrastructure
modernization program, while the balance will go to social services.

 More people can now be tax exempt because to it. This tax structure increased
the number of people who benefited, especially those with mixed earnings and
concurrent employment. The Donor's Tax and Estate Tax are both subject to
uniform tax rates under Train Law, making it simpler to calculate the taxes owed.

 The implementation of “PANTAWID PASADA PROGRAM (PPP). The PPP

distributed fuel vouchers to qualified franchise holders of public utility jeepneys
(PUJs) to partially offset the impact of higher excise taxes on fuel products as
well as to partially compensate for the decrease in income brought by the fare
discounts.
 TRAIN Law reduced the income tax rate of employees of Regional Headquarters
(RHQS), Regional Operating Headquarters (ROHQS), Offshore Banking Units
(OBUS), and Petroleum Service Contractors and Subcontractors;

 Reducing and streamlining the current tax bracket system, the TRAIN Act has
addressed the flaws in the current tax code. Several low-wage workers were
spared from paying income tax as a result. Some of its benefits include a
reduced and simplified corporate income tax as well as greater fiscal incentives.
What is the Disadvantage of TRAIN Law?

 The majority of respondents feel the additional tax will be a burden to

consumers, as cited in Rappler.com, 2017.

 It was clear that TRAIN Law made life more difficult for millions of lower-income
households in the Philippines, including those owned by farmers, fishermen, and
other members of the underprivileged social classes, as a result of the country's
dramatic rise in inflation to record highs. The main cause of this effect was the
high excise taxes placed on coal, oil, and petroleum-based products.

 According to a study from AC Nielsen Retail Survey, 80 percent of beverage

consumers are low-income earners who will not benefit from the revised income
tax scheme. About 1.3 million sari-sari store owners will also be affected, as 40%
of their sales come from these beverages.

 There has been a perception that this reform scheme will burden a demographic
segment that is less wealthy and poor. This was the data that the administration
had advertised. The truth is that more taxes imposed by the government are
ultimately passed on to middle- and lower-class citizens, which raises the
inflation rate.

 It may have reduced the personal income taxes of Filipinos but it also increased
the cost of living in the Philippines.The TRAIN law resulted in a significant
inflation rate for necessities

 Due to wealth disparity, the law was stricter on rich people's earnings and milder
on the salaries of the poor. Only extremely wealthy Filipinos were impacted by
the top marginal tax rate; the majority of TRAIN was still paid for by the poorest
Filipinos.
 The reform led to high loss of revenue for the government. According to the
Family Income and Expenditure Survey, the losses are estimated to be around
P210 billion in 2018, P223 billion in 2019 to 2022; P238 billion in 2023.

BULLETED FORM

Introduction of TRAIN LAW:

 On December 19, 2017in Malacanang, President Rodrigo Roa Duterte signed
into law Republic Act No. 10963, otherwise known as the Tax Reform for
Acceleration and Inclusion (TRAIN) Act.
 The first package of the Comprehensive Tax Reform Program (CTRP)
 took effect on January 1, 2018
 five certain provisions covered
 aims to make the Philippine Tax System simpler, fairer and more efficient
 raise revenues to fund the President’s Build, Build, Build
 sustain high and inclusive growth of the country; and finance investment

Several provisions of the National International Revenue Code of 1997

 personal income taxation
 passive income for both individuals and corporations
 estate tax
 donor’s tax
 value- added tax ( VAT ) excise tax
 documentary stamp tax (DST)
 tax administration among others

New taxes imposed under the Republic Act 10963:

A. RA 10963 increases the tax rates on petroleum product
-in three (3) tranches
-beginning January 1, 2018 to January 1, 2020
-from P2.5 to P6.0
-an increase in the price of gasoline followed by an increase in the price of goods is
usually felt immediately by the poor. 

B. sweetened beverages also increased

-Excise tax on sweetened beverages (SBs) is one of the new taxes imposed
-took effect last Jan. 1 2019
-supported by DOF and DOH to curb the consumption of SBs and address the
worsening number of diabetes and obesity cases
-levied at P6 or P12 per liter of volume capacity, depending on the type of added
sweetener.

Advantages of TRAIN Law:

1. made to provide hefty income tax cuts for majority of Filipino taxpayers
2. raises significant revenues to support the president's priority social and
infrastructure programs
3. More people can now be tax exempt
4. Leads to the implementation of “PANTAWID PASADA PROGRAM (PPP)
5. Reduced the income tax rate of employees of RHQS, ROHQS, OBUS, and
Petroleum Service Contractors and Subcontractors
6. Reducing and streamlining the current tax bracket system

Disadvantages of TRAIN Law:

1. additional tax will be a burden to consumers
2. made life more difficult for millions of lower-income households
3. 80 percent of beverage consumers are low-income earners who will not benefit
4. burden a demographic segment that is less wealthy and poor
5. increased the cost of living in the Philippines
6. stricter on rich people's earnings and milder on the salaries of the poor
7. high loss of revenue for the government

References:

Gorton G. (2022). Tax Definition: Types, Who Pays, and Why. Investopedia.
Retrieved January 27, 2023 from
https://www.investopedia.com/terms/t/taxes.asp

Schnabel C.(2017). Duterte vetoes parts of tax reform law. Rappler. Retrieved
January 27, 2023 from
https://www.rappler.com/business/192032-duterte-vetoes-train-tax-reform/

TRAIN Law explained in 45 seconds!. Retrieved January 27, 2023 from

https://www.youtube.com/watch?v=kz9biFMn9JQ
Excise Tax on Petroleum Products in the Philippines. Congressional Policy and
Budget Research Department. Retrieved January 27, 2023 from
https://cpbrd.congress.gov.ph/2012-06-30-13-06-51/2012-06-30-13-36-50/1446-
ff2022-13-excise-tax-on-petroleum-products-in-the-philippines

Brigada: Epekto ng TRAIN Law sa mga Pilipino, tinalakay sa 'Brigada'. GMA

News. Retrieved January 27, 2023 from https://www.youtube.com/watch?
v=3JfVX6DMuls

Package 1: TRAIN. Taxreform Department of Finance. Retrieved January 27,

2023 from
https://taxreform.dof.gov.ph/tax-reform-packages/p1-train/#:~:text=The%20Tax
%20Reform%20for%20Acceleration,%2C%20fairer%2C%20and%20more
%20efficient.

Positive and Negative of TRAIN Law. Retrieved January 27, 2023 from
https://myessaybook.com/positive-and-negative-effects-of-train-law/