Ang Bayan
June 07, 2019

TRAIN: Regressive taxation

Share and help us bring this article to more readers.

EVEN AGENCIES of the reactionary government cannot deny the adverse effect of the TRAIN law on the economy. A research by the Philippine Institute for Development Studies published on Decmber 2018 indicate that the imposition of new taxes have adversely affected the manufacturing sector and worsened the plight of the poorest Filipino families.

The research indicates that lower manufacturing output and employment generation in the sector is a long-term effect of the new taxes levied on carbon and petroleum used as fuel for production and the transportation of products. Small and medium-scale businesses are most affected by this as they are least capable of renting large trucks to transport their products. In another research, the agency stressed that the poorest families now pay more out of their incomes as a result of the new taxes levied on sugar-sweetened beverages.

Both studies validate the longstanding position of Ibon Foundation that the taxation policy implemented under the TRAIN law is regressive. This means that it imposes a higher tax burden on the poorest than those from higher income deciles. This is despite the the tax exemption for individuals earning P250,000 annually. Many already criticized this deceptive scheme, as the personal tax exemption was implemented along with the imposition of taxes on food and transportation.

IBON said that the income of the highest earning 40% grew while that of the toiling masses shrinked under the first year implementation of TRAIN law. The income of those earning P25,000 and above monthly increased by P1,000-P33,000 over the the year, while those of the poorest 60% with wages that are just sufficient or lower than the budgetary requirement for their daily needs are cut by P800-P4,000.

AB (2019-06-07): TRAIN: Regressive taxation