AN INITIAL LOOK AT THE TRAIN LAW:

ARE WE ON THE RIGHT TRACK?

By Edwin P. Santiago

I believe the benefits of tax reform should flow to those

who most need them most – hard-pressed working families
struggling to reach or stay in the middle class.

– Raja Krishnamoorthi, US Representative, Illinois

Introduction

While taxes in general have largely been accepted as a way of civilized life, what remains
debatable are how government implements its system of taxation and how the money from it gets
spent.

Thus, corollary discussions on tax administration reforms are inevitable, perpetual and
controversial, but they always serve as a good political message to win over support. How else
can you react to the quote from US Representative Krishnamoorthi cited above, except to agree
to its pro-people stance? The rhetoric seems to be universal – tax cuts for the not so rich, more
efficiency in tax collection, and more taxes on undesirable products and services.

The Philippines does not seem to be veering away from this.

On December 19, 2017, President Rodrigo Duterte signed Republic Act No. 10963,
otherwise known as the Tax Reform for Acceleration and Inclusion Act (TRAIN), with the goal to:

create a more just, simple, and more effective system of tax collection, as per the
constitution, where the rich will have a bigger contribution and the poor will benefit more
from the government’s programs and services (Department of Finance, 2018).

In practical terms, the TRAIN Law is supposed to reduce tax rates of salaried Filipinos,
thereby increasing their take-home pay. But, at the same time, it is intended to increase tax rates
on other goods and services to compensate for the lost revenues.

Tracing the beginnings

Given the political pull of the promise of lowering the tax burden, it was not surprising and
it was even expected that the presidential bets in the 2016 elections would weigh in on the issue.

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 Then Vice President Jejomar Binay made a campaign promise to exempt from paying
income taxes those earning P30,000 or below every month. Similarly, then Davao City mayor
Rodrigo Duterte promised income tax exemption for workers earning P20,000 and below,
although he initially opposed cutting taxes in November 2015, citing the need for money to fund
his promised job creation and public safety programs.

Senator Grace Poe said she would strive to lower tax rates in the Philippines, but
promised that it would not affect the quality and delivery of social services. On the other hand,
former Senator Miriam Defensor-Santiago vowed to reform the tax system to make it more
competitive with our neighboring countries and to make the system fairer for citizens.

Lastly, Senator Manuel Roxas II raised apprehensions about cutting tax rates as social
services may suffer if the government does not have enough tax money to fund its programs.

Although, tracing back, even in 2014, long before the campaign for the presidential
elections, both houses of Congress have been discussing the tax reforms, featuring a lowering
of the income tax rates. Senator Angara, for instance, filed Senate Bill 2149 in February 2014, to
lower income tax rates across-the-board, reducing the highest tax rate from 32 to 25 percent, and
to compress the tax brackets from seven to five. Several other versions of the tax reform were
likewise introduced in the Senate and the House of Representatives. It has been reported that at
least 24 bills to amend the current tax system were filed in Congress.

Jumpstarting the tax reforms

During President Duterte’s first State of the Nation Address (SONA) on July 25, 2016, he
expressed his intention to improve the country’s tax system:

On taxation, my administration will pursue tax reforms towards a simpler and more
equitable and more efficient tax system that can foster investment and job creation. We
will lower personal and corporate income tax rates and relax the Bank Secrecy Law.

The President promised that the revenues generated from taxation would be put into good
use. He further described taxes as the “gasoline” that the government heavily relies on
(Department of Finance, 2018). Finance Secretary Carlos Dominguez asserted that:

The tax reform seeks to achieve a simpler, fairer, and more efficient tax system
characterized by lower rates and a broader base, to encourage investment, job creation,
and poverty reduction (Department of Finance, 2017d).

Dominguez further claimed that without the tax reform, the administration’s idea of
boosting public investments in infrastructure, education, health, and social protection would be
“disrupted.” In addition, the tax reform will be used to finance programs meant to raise people

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from poverty, create a Golden Age of Infrastructure, and to maintain strong macroeconomic
fundamentals (Department of Finance, 2017d).

On September 26, 2016, four months after President Duterte took his oath of office, the
Department of Finance (DOF) formally submitted its tax reform proposal to the House of
Representatives (Department of Finance, 2017g). It was initially met with criticism.

Finance Undersecretary Karl Kendrick Chua, described by Dominguez as the one who
“did the heavy lifting” to push the bill in Congress, asserted that the tax briefings carried out by
the DOF took into consideration “a wide cross section of society – from business and civil society
groups to public school teachers, transport groups, farmers and fisherfolk” (Department of
Finance, 2017f).

He added that the DOF made sure to adjust to the concerns posed by different
stakeholders, such as retaining the 13th month bonus exemption, staggered excise tax increases
on oil, and keeping the VAT exemption of senior citizens and of persons with disability (Cigaral,
2017).

The tax reform proposal has been supported by more than 200 individuals and groups,
such as former DOF secretaries and undersecretaries, directors-general of the National Economic
and Development Authority (NEDA), top officials from the Bangko Sentral ng Pilipinas (BSP), the
Department of Budget and Management (DBM), the Department of Health (DOH), the Department
of Transportation (DOTr), the Department of Energy (DOE), the National Power Corporation
(NAPOCOR), and the Land Transportation Franchising and Regulatory Board (LTFRB)
(Department of Finance, 2017e, 2017f).

Aside from these executive departments, the proposal was also endorsed by those from
other sectors, such as the heads of the local business community, the academe, labor and student
groups, foreign business chambers and foreign embassies, civil society organizations, among
others (Department of Finance, 2017f).

The journey through Congress

On January 17, 2017, House Ways and Means Committee chairperson and Quirino
Representative Dakila Carlo E. Cua introduced and filed the first package of the CTRP as House
Bill (HB) 4774, otherwise known as the Tax Reform for Acceleration and Inclusion, which was
endorsed by the Department of Finance on September 26, 2016.

This bill was intended to reconstruct the personal income taxes as well as to widen the
value-added tax (VAT) base (Cigaral, 2017; PricewaterhouseCoopers, 2017). The House Ways
and Means Committee is responsible in formulating tax laws (Department of Finance, 2017d).

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 After 13 public hearings within the next four months, on May 8, 2017, the House Ways
and Means Committee endorsed HB 5636, which is a substitute measure that combined HB 4774
and 54 other bills on taxation. Only moderate revisions were done on HB 5636 from the original
HB 4774.

HB 5636, which was co-authored by more than 100 congressional representatives, had
its first reading on May 15, 2017 (Caraballo, 2017). The earmarking provisions of the bill were
then approved by the House Committee on Appropriations chaired by Davao City Representative
Karlo Alexei Nograles (Department of Finance, 2017c, 2017d).

Finally, on May 31, 2017, the House of Representatives approved and passed on third
and final reading of HB 5636 with a 246-9 vote with 1 abstention (Department of Finance, 2017e).

A few days prior to that, on May 29, 2017, President Duterte certified the TRAIN as an
“urgent and priority measure.” On July 11, 2017, the approved HB 5636 was finally transmitted to
the Senate (Department of Finance, 2017f).

Meanwhile, in the upper house, Senate President Aquilino Pimentel III filed Senate Bill
(SB) 1408 on March 22, 2017, which was the Senate counterpart of the House of Representatives’
tax reform measure. Pimentel said that the SB 1408 could assist in the funding of the
administration’s Ambisyon Natin 2040, which was intended to eradicate extreme poverty in the
Philippines by 2040. SB 1408, which was close to the HB 4774, hoped to reduce the PIT rates,
improve the collection of tax revenues, and set a flat rate of 6% for estate and donor taxes (The
Manila Times, 2017).

Eventually, on September 20, 2017, Sen. Juan Edgardo “Sonny” Angara, the chairperson
of the Senate Ways and Means Committee filed SB 1592 (Department of Finance, 2017f). Under
this Senate bill, 60% of the revenues generated from the TRAIN would fund the government’s
infrastructure programs, 27% would be used for social protection programs (e.g. unconditional
cash transfers, health programs, etc.), while 13% was to be allocated to modernization programs
of the military. On November 28, 2017, SB 1592 had its third and final reading and was officially
approved by the Senate with a 17-1 vote (Department of Finance, 2017g).

A bicameral conference committee began with the consolidation of HB 5636 and SB 1592
on December 1, 2017. There were stark differences between the two bills. The Senate version
suggested lower tax rates to be levied on automobiles, sugar-sweetened beverages, and fuel.

Furthermore, it included provisions that were not present in the House version, such as
the imposition of taxes on mining, coal, cosmetic procedures, and the exemption of prescription
drugs and medicines from VAT (Elemia, 2017). The Senate version of the bill was favored and
approved on December 11, 2017. It was eventually ratified by Congress on December 13, 2017
(Dela Cruz & Fernandez, 2017; Dumaual & Gulla, 2017).

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 Finally, on December 19, 2017, President Duterte signed into law Republic Act (RA)
10963, or the Tax Reform for Acceleration and Inclusion Act (TRAIN). The TRAIN law was to be
implemented on January 1, 2018.

Winners and losers

Upon signing the TRAIN Law, President Duterte announced it as a “fulfillment of a

campaign promise” (ABS-CBN News, 2017), describing it further as “the administration’s biggest
Christmas gift to the Filipino people as 99 percent of the taxpayers will benefit from the simpler,
fairer and more efficient tax system.”

A main component of the law was the new income tax rate. With the TRAIN Law, the base
of individuals who are exempted from income tax has been widened to cover workers who earn
P250,000 per year, or around P22,000 per month, or less. The threshold for taxable bonuses was
also increased from P82,000 to P90,000 (Galolo, 2017; Medenilla, 2017).

Most of those who belong to the middle class should feel considerable relief from being
overburdened by taxes, and if they invest a portion of their take-home pay for entrepreneurship,
then they could also contribute to the country’s economic growth (Mendoza & Cruz, 2018; Diokno,
2018).

The Department of Finance (2017h) added that 99% of the country’s taxpayers will get to
have a higher take-home pay. However, Alan Tanjusay, the spokesperson of the Associated
Labor Union – Trade Union Congress of the Philippines (ALU-TUCP), asserted that employees
with taxable income are the only ones who have the upper hand with the implementation of the
TRAIN Law (Medenilla, 2017). Given the increase in the people’s disposable income,
consumption will spur.

The main beneficiaries of the TRAIN law are the workers earning above minimum wage
but not more than P250,000 per year (COL Financial Philippines, 2018). Theoretically, according
to Punongbayan (2018):

the biggest winners from TRAIN are the unskilled workers (who will enjoy a 4.3% bump in
their monthly incomes), followed by skilled workers (4.1%), partly skilled workers (4%),
professionals (3.8%), and the middle class (3%). Meanwhile, the biggest losers are CEOs
and top taxpayers (whose incomes will fall by 1.8% to 3.5%). At the same time, the poor
will also see income cuts, albeit not as much (less than 1% of their incomes).

Abrea Consulting Group founder Raymond Abrea agreed that the “real big winners” are
those who earn an income of P250,000 or less per year since they are not subject to personal
income tax. On the other hand, those with an income of P8 million per annum are imposed with

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a 35% income tax rate per year. But then, everyone, especially the poor, would be hit by higher
prices of goods and services. However, Abrea claimed that everyone must “endure some
sacrifices to make the system work” (“Winners and losers,” 2017).

Some individuals and groups from the banking and real estate sectors remarked that the
TRAIN Law would be beneficial to their sector. Cebu Chamber of Commerce and Industry (CCCI)
President Melanie Ng stated that the tax reform could tackle the problem regarding high costs of
doing business in the country and thus be instrumental in the Philippines’ global competitiveness.

Colliers International Philippines further declared that the TRAIN law is favorable to the
real estate sector. With the trimming of personal income tax rates, more Filipinos would be able
to afford the purchase of properties (Galolo, 2017). Banks and construction, cement and property
companies are also expected to benefit from the TRAIN Law as a result of higher demand and
infrastructure and investment spending (COL Financial Philippines, 2018).

Department of Health Undersecretary Dr. Lilibeth David added that the TRAIN Law is a
set of “healthy policies” for the environment (Department of Finance, 2018). The law levied taxes
on goods that yield “socially undesirable effects”: petroleum products contribute to pollution,
automobiles play a part in traffic congestion and pollution, and cigarettes and sugar-sweetened
beverages cause several health problems (Punongbayan, 2018).

On the other hand, despite the tax cuts from the people’s personal income, the TRAIN
Law has been criticized for burdening all consumers because of higher prices in certain goods
and services as the law was not limited to providing tax exemptions and reducing tax rates. It also
included revenue measures that raises duties on fuel, cars, coal and sugar-sweetened drinks.

The revenue upswing resulting from the TRAIN Law, which is expected to reach around
P92.3 billion for its first year of implementation (Mendoza & Cruz, 2018), is aimed largely at
securing funding for the Philippine government’s P8-trillion infrastructure program – the “Build,
Build, Build” program and other operating and social service costs (Cigaral, 2018; Aquino, 2018).

A portion of the revenues from the excise tax levied on fuel would go to the Targeted
Unconditional Cash Transfer (TUCT), a program that provides P200 (and eventually, P300) per
month per household to aid poor Filipinos in the short-term to “adjust smoothly to the temporary
shocks” induced by the price increases as a result of the TRAIN Law. The poorest Filipino families
would also be provided with a social welfare card to make sure that the government is able to
issue them with cash subsidies and other benefits like discounts on medicines, transportation,
rice, as well as vocational training (Department of Finance, 2018).

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 Bayan Muna party list Representative Carlos Isagani Zarate contended, “mayroon ngang
binigay na mga benepisyo sa kaliwang kamay, pero talagang nawawala rin dahil kinakain ng
pagtaas ng mga presyo at pag-impose ng bagong taxes” (Fenol & Fuentes, 2018).

Meralco First Vice President Ivanna de la Peña added that since the country’s power
generation is derived mainly from coal, an increase in the excise tax on coal will conspicuously
have an effect on all consumers from various sectors, may it be residential, commercial or
industrial (Lectura, 2017).

President Duterte made it clear that “the poor and vulnerable are at the heart of [the] tax
reform” (Department of Finance, 2018). However, several groups and individuals claimed
otherwise and argued that the tax reform law puts the poor on the edge. The ones who are
severely hurt by the TRAIN Law are the poor because they are faced by higher excise taxes and
higher inflation, which would easily exhaust their income.

Even though the richer households are the major consumers of petroleum and would thus
be the ones who would be hurt the most with the increase in taxes, the poor would still be at a
disadvantage (Punongbayan, 2018). A rise in the taxes and prices of petroleum creates a domino
effect; considering that many households and industries rely on petroleum, the cost of
transportation, electricity, and production of various goods are sure to rise accordingly. Because
of this, Manasan (2017) claimed that the “direction of the PIT reform [is] not pro-poor.”

While the personal income taxes of the salaried workers were cut down in order to
increase their disposable income and purchasing power, most self-employed workers, particularly
those who belong to the informal sector, are still at a disadvantage. Prior to the implementation
of the law, they did not have to pay personal income taxes to begin with (Fuentes, 2018). Thus,
they do not receive any equivalent benefit and have no choice but to shell out more money as a
result of higher excise taxes levied on certain products like petroleum. With the increase in prices
of particular goods for consumption, their take-home pay may easily be exhausted, since they do
not receive additional income.

According to the Associated Labor Unions-Trade Union Congress of the Philippines (ALU-
TUCP), around 15.6 million informal workers will suffer as a result of the TRAIN Law. ALU-TUCP
spokesperson Alan Tanjusay argued that since these workers do not receive any form of direct
benefit from the tax reform law, there is a possibility for these “underground economy workers [to]
fall further way below the poverty line” (Pasion, 2017). These informal workers, which include
farmers, fishermen, public utility vehicle (PUV) drivers, street vendors, carpenters and domestic
helpers, are not covered by the country’s labor laws since they are small-scale, independent, self-
employed workers who do not have a formal employer (Medenilla, 2017; Fuentes, 2018).

Because of the disadvantageous position that the poor were put into, ALU-TUCP appealed
that the government defer the implementation of the tax reform law until the government is

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capable of providing the vital protective measures for the workers who belong to the informal
sector. Tanjusay further explained that the law did not incorporate any policy or program for
underground economy workers, and the only way to protect them is to improve the government’s
social safety-nets for these workers (Medenilla, 2017).

According to IBON Foundation (2017), it is evident that the tax program law has
“regressiveness and anti-poor character” wherein the rich benefit while the poor suffer. First, the
poor majority of Filipinos who earn not more than P15,000 per month are burdened by higher
taxes and thus higher costs of transportation, sweetened beverages, and other goods. Second,
even though the law includes short-term unconditional cash transfers for 10 million poor families
worth P200 per month in 2018 (P300 for 2019 and 2020), these are not enough. Third, the richest
1% of the population, or those who earn P150,000 to more than P7,000,000 monthly would enjoy
the tax cuts and still be able to sustain their luxurious lifestyles and standard of living despite the
levy of high taxes on several goods and services. Lastly, even though the government affirmed
that the “Build, Build, Build” program, which would be partly funded by the TRAIN Law, would be
beneficial to the poor, the infrastructure projects under this said program are “concentrated in the
country’s high-income regions”, particularly in the National Capital Region, Southern Tagalog,
and Central Luzon, and not in the poorer parts of the country.

Budget Secretary Diokno (2018) admitted that there would be some families who would
suffer even more with the implementation of the law. In an effort to cushion the inflationary impact
of the tax reform law on Filipino indigents, the government would provide P200 monthly per
household which belong to the poorest 50% of households on the first year of the implementation
of the TRAIN law. This targeted unconditional cash transfer (TUCT) will be raised to P300 in 2019
and 2020. With the TUCT, around P24.5 billion would be divided among 10 million poor families
(Diokno, 2018; Department of Finance, 2018).

How the public is reacting

The implementation of the TRAIN law was met with mixed reactions (Galolo, 2017;
Mendoza & Cruz, 2018). Jo-An Latuja Diosana, the senior economist of the non-government
organization Action for Economic Reforms (AER) described the TRAIN as “a mixed bag of nuts.”

Filipinos who belong to the working and middle classes, and even the rich, are relieved as
a result of lower income taxes. However, despite the fact that the aim of the tax reform law was
to reduce unnecessary VAT exemptions, the TRAIN law failed to address that issue and even
included new exemptions (ABS-CBN News, 2017). Punongbayan (2018) of the UP School of
Economics shared Diosana’s sentiments, further stating that the TRAIN law did not include
provisions meant to combat administrative problems, particularly the widespread corruption
present in the Bureau of Customs.

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 Efren Hipe, the executive director of Eastern Samar Initiative for Employment and
Development, Inc., supported Undersecretary Chua’s statement to look at the bigger picture and
not at a small portion of the tax reform. He added, “Kung nga iyon ang interest ng sector mo, hindi
mo ma-appreciate”. Instead, if one looks at the tax reform as a whole, that is when one would see
the benefits that would be reaped (“Open government dialogues”, 2017).

According to Dolly Laudenerio, a PWD Council member of the National Anti-Poverty

Commission:

I like this tax reform. Magiging progressive siya as long as mapatupad ito nang husto.
Nakikita ko beneficial siya someday dahil nakalaan talaga [ang revenue] para maiangat
ang marginalized sector – iyan ay kung mabubuting kamay din ang mapupuntahan
hanggang sa grassroots level (“Open government dialogues,” 2017).

Based on a study by the University of Mindanao – Institute of Popular Opinion, younger

workers aged 18-29 were found to be “strongly in favor” of the TRAIN Law. This study, which was
conducted from January to February 2018, revealed that among the 1,200 people from three
Congressional districts in Davao who participated, many younger workers believed that they will
reap long-term benefits from the TRAIN Law, despite feeling the impact of the tax reform law,
particularly the increase in the prices of several goods (62%), the increase in their take-home pay
(23%), and the impact of the law on the prices of gas and oil (16%) (Petalcorin, 2018).

According to the Department of Finance (2017c), some Filipinos took to social media,
specifically on the official Facebook page of the Department to express their support for the
passage and the implementation of the TRAIN Law. Lito Simba asserted that the law is “good for
the country” since it will “standardize and simplify the tax system,” thus making it “less
cumbersome” for the people to comply with. Gladys Harder commented that the tax reform will
surely contribute to the improvement of the Philippine economy since it would “strengthen the
buying capacity of peso earners” (Department of Finance, 2017c).

Mon Abrea, a tax specialist who has expressed favor for the TRAIN Law, admitted that
the tax reform would be a burden to the workers who belong to the informal sector. Nevertheless,
he believed that the social mitigation measures such as cash transfers and other subsidies for
the country’s 10 million poor families could cushion this burden (Fuentes, 2018).

In addition, the passage and implementation of the TRAIN Law was praised by
environmental advocates. Greenpeace explained that with higher taxes levied on coal,
communities and the government would have the incentive to transform the country’s energy
systems to renewable sources, which are considered to be cheaper, safer and cleaner
alternatives to coal. Angela Consuelo Iboy of WWF-Philippines added that the country’s
companies and industries urgently need to incorporate the concept of sustainable development

9
into their business strategies, especially that pollution and resource exploitation caused by these
companies are detrimental not only to the planet but to everyone’s well-being (Lectura, 2017).

On the other hand, as anticipated, the passage and implementation of the TRAIN Law
was also met with backlash. Based on a study by digital research firm Research and Tech Lab
(RTL), many Filipino ‘netizens’ perceive the law in a negative light. The firm, which conducted the
said study from January to February 2018, revealed that 94.08% of 861 recorded sentiments
online pertaining to the TRAIN Law claimed that it was detrimental to the country (Cabuenas,
2018).

Several groups and individuals have criticized the law for being “anti-poor.” Makabayan
legislators from Anakpawis and ACT Teachers Party List emphasized that taxes were imposed
on goods and services that directly affect Filipino consumers, and these are the same goods and
services that they use or consumer everyday. These include basic commodities, electricity, and
public transportation (Salem, 2017).

IBON Foundation (2017) further explained that the tax reform law would be beneficial only
to the rich but detrimental to the poor. Thus, IBON asserted that real tax reform must involve the
reduction of consumption taxes, the increase of the taxes of those who belong in the high-income
brackets, and the specific allocation of tax revenues to certain social and economic services. In
other words, the government’s initiatives must focus on the “people’s welfare and national
development over elite interests.”

Some have also raised concerns and doubts regarding the effectiveness of the safety nets
to cushion the poor from the impact of the TRAIN law. The Trade Union Congress of the
Philippines (TUCP) shared the same sentiments. According to TUCP spokesperson Alan
Tanjusay, if the safety nets meant to cushion the impact of the TRAIN Law are deemed ineffective,
it would not only worsen the poverty problem that has been persistent in the country, but it would
also lead to the dwindling of President Duterte’s popularity and support (Ong, 2018).

Kilusang Mayo Uno, a militant labor group described the tax reform law as a “stupid
proposition” that will only be used in order to finance the ambitious infrastructure projects under
the “Build, Build, Build” program (Pasion, 2017).

According to Dindo Manhit (2018), the founder and managing director of Stratbase Group,
it is apparent that the government has been assertive in creating an economic environment that
is appealing to investors. The second package of the CTRP, which intends to minimize Corporate
Income Tax (CIT) rates and modernize fiscal incentives has been submitted to Congress in
January 2018. However, Manhit suggested that for the succeeding packages under the CTRP,
the government must refrain from imposing further or new taxes that would overburden the
average Filipino people even more. As an alternative, there must be an emphasis on initiatives
that will “make the tax system more efficient, simplify compliance among taxpayers, and plug

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leakages and loopholes in the system.” In order for these to materialize, revenue collection
agencies must be capable to fulfill their collection targets and government agencies involved in
the implementation process must utilize the generated revenues in an efficient and productive
manner.

Conclusions and recommendations

In May 2018, a few months after the TRAIN Law was put into effect, some senators raised
concerns and called for the suspension of the said law because of its immediate inflationary
effects (Legaspi, 2018). This is because inflation has risen dramatically ever since the law was
implemented: 3.4% in January, 3.8% in February, 4.3% in March, and 4.5% in April 2018
(Philippine Statistics Authority, 2018).

These came about following the implementation of the TRAIN Law, coupled by the stark
increase in international oil prices due to tensions in the Middle East and the depreciation of the
peso vs. the US dollar (Lagrimas, 2018b).

On the other hand, during the first quarter of 2018, the share of tax revenues to the
country’s gross domestic product (GDP) soared to 14.47%, the highest first quarter tax take thus
far. Tax collection during the period grew by 18.2%, increasing to P567.1 billion from the previous
year’s P479.9 billion (Padin, 2018).

Furthermore, with the unfolding of the infrastructure projects under the “Build, Build, Build”
program, the share of government spending on GDP rose to 20% (De Vera, 2018). Thanks to
government spending on public construction and capital formation as well as household
consumption, the country’s economy grew by 6.8% from January to March 2018.

But, Socioeconomic Planning Secretary Ernesto Pernia described the high inflation as
having “spoiled” the government’s aim of targeting a 7-8% growth rate for the entire year. He
added that the GDP growth for the quarter would have been higher if not for the high inflation
(Dela Paz, 2018).

A negative argument about the TRAIN Law is in the area of immediate implementation of
various tax takes in one fell swoop. Perhaps, a staggered implementation could have mitigated
the impact on inflation.

The public is, understandably, split on whether the TRAIN Law is good or bad for them.
Of course, those who feel that they gain a net benefit will proclaim the virtues of the law. And,
those who feel the negative effects of the law, will say otherwise. What would definitely be
positively received, though, are much-improved government services, resulting from improved tax
collection efficiency and not from tax increases.

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 Generally speaking, the positive macroeconomic indicators seem to suggest that the
Philippines may be on the right track in the implementation of its tax reforms. Of course, these
encouraging figures could have resulted from other fiscal measures. At any rate, the collateral
damage – resulting from the increase in prices of basic commodities – seems real and should be
closely monitored and managed.

For now, it seems the jury is still out on their verdict on the TRAIN Law.

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laws-package-1b

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COL Financial Philippines. (2018). Winners and losers of TRAIN. Retrieved from
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Department of Finance. (2017h, December 27). The tax reform for acceleration and inclusion
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Galolo, J. (2017, December 18). Mixed reviews as TRAIN bills proponents avoid derailment.
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About the Author

Edwin P. Santiago is a full-time faculty member of the Political Science Department of De La Salle
University. He handles courses both in the Political Science and the Development Studies
programs of the department.

At De La Salle University, he occupied several administrative positions including Vice President

(Vice Chancellor) for Administration from 2013 to 2016, Associate Vice Chancellor for Academic
Services from 2008 to 2013, University Registrar from 2001 to 2013, Chair of the Business
Management Department from 2003 to 2004, Vice Chair of the Political Science Department from
2000 to 2001, and Chief Administrative and Finance Officer of the Social Development Research
Center, from 1998 to 2000.

In the government, he has held such positions as Head Executive Assistant in the Office of the
Secretary of Finance in 1998, Consultant in the Department of Budget and Management from
1991 to 1998, and Consultant in the Philippine Amusement and Gaming Corporation from 1996
to 2001.

Since 2002, he is a Fellow at the Yuchengco Center where he writes policy briefs and occasional
papers. He maintains his active consultancy practice in the fields of service operations
management and higher education administration.

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Since 2018, he is also the Executive Director of Stratbase-ADRi, where he provides administrative
and technical support to the Institute and in establishing and maintaining working relationships
with its networks. His interests are in the areas of political economy, public administration, and
fiscal administration.

Mr. Santiago continues to serve as consultant to schools, private companies and government.
His primary field is in leadership, management/administration, process improvement and
organizational development.

Mr. Santiago was an Exchange Fellow at the Sophia University in Tokyo in 2009 and at Fordham
University in New York City in 2007.

He is currently a candidate for the degree Ph.D. in Development Studies at De La Salle University,
where he also obtained his Master of Business Administration degree, and his undergraduate
degrees in Bachelor of Science in Commerce major in Accounting and Bachelor of Arts in Political
Science, both in 1989. He is a Certified Public Accountant.

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