Fil-Can View By Daniel Nolasco-Cajurao » Welcome Perilous TRAIN!
MYOPIC LEGISLATION - As we gladly welcome the Year of the Dog, we also welcome, but with heavy heart, the new Tax Reform for Acceleration and Inclusion(TRAIN) Law (R.A 10963), which took effect on the first day of 2018. Unlike with the coming of the Year of the Dog that we hope to bring some good blessings to our lives, the TRAIN Law appears otherwise as it is perceived to have provisions that outweigh its benefits that the government trumpets with no fear of hesitation.
Among the publicly disclosed highlights of the new TRAIN Law vis-à-vis the outdated National Income Revenue Code include the reduction of Personal Tax Exemption up to P250,000.00, while those earning above P250,000.00 will be taxed from 20% - 35%. Other tax relief provisions are the reduction of estate tax, higher deductible 13th month pay of P90,000.00, fixed 8% tax on Gross Sales or Receipts not more than P3,000,000.00 for self-employed persons or entrepreneurs, flat rate of 6% for Estate Tax, fixed 6% Donor's tax, and VAT exemption of drugs for diabetes and hypertension, residential lease up to P15,000.00, and homeowners association dues.
But it seems some unfavorable provisions are deliberately concealed upon like fine prints in some lease contracts, as most of it have never been discussed succinctly and distinctively to the people. We regret to principally mention the imposition of a higher Excise Tax, a kind of indirect tax imposed upon by the government to the manufacturer, in addition to sales tax or value-added tax. Thus, gasoline and manufactured petroleum products and oils have an Excise Tax ranging from 3 - 8%, which is over and above the Tariff charged by the Bureau of Customs for all imported products.
Certainly, any increase in Excise Tax for gasoline and petroleum products, such as oils and lubricants, will eventually trigger the increase in prices of prime household commodities and the cost of basic services, such as transportation, water and electricity, as well as the cost of delivery or distribution of farm and factory products. Henceforth, any increase in prices of transportation fares and commodities and basic services will undoubtedly cause more miseries and agonies of the poor Filipinos.
Reliable reports also disclosed that electric cooperatives and water districts are contemplating either to increase their rates or laid off employees, if only to keep their cost of production within manageable level and get rid of that red ink on their financial statements. Even gas dealers who expect to eventually suffer razor thin profit margin due to this higher Excise Tax would likely resort to shutting down their pumps.
Perhaps due to their myopia, our legislators failed to realize in their mind that gasoline, oils, and lubricants are the major and direct factors of the Cost of Production, be it manufacturing or agriculture and aquaculture farming, thus the Cost of Goods Sold is relatively high, endangering the profitability of the business firms or farmers. No wonder, even the price of a piece of pandesal and a piece of galunggong are now skyrocketing. Anyone can come forward and imagine when there's a low supply, if not scarce, of gasoline? Just as the dwindling rice supply caused panic among households nowadays, the insufficiency of gasoline, which is the lifeblood of any industries, will certainly be perilous to the country.
Corollary to the high Excise Tax on gasoline and Petroleum products is the increased tax from 7.5% to 15% on all passive incomes, such as the interest income from dollars and other foreign currency deposits, income from pre-terminated long-term deposits - 20%, earnings from the sweepstakes - 20% if more than P10,000.00, and sale of shares of stock - 15% if not traded through Stock Exchange.
There's also advise from leading economist, "If you're planning on buying a car, do it as soon as possible because automobiles aren't exempt from excise tax". The TRAIN Law imposed 4% tax on vehicles worth P600,000.00 and below, 10% for vehicles worth over P600,000.00 up to P1million, 20% for vehicles priced above P1million to P4million, and 50% for vehicles above P4million.
The new TRAIN Law also introduces new taxes in the form of excise tax on beverages that uses caloric or non-caloric sweeteners - P6.00 per liter, while for beverages containing High Fructose Corn Syrup(HFCS) - P12.00 per liter. Hence, don't be astonished when your next favorite softdrink will come to with a price higher than what you pay during your last snack.
Invasive cosmetic procedures directed solely towards improving, altering, or enhancing the patient's appearance, such as dentures, implants, and cosmetic surgery, is now subject to excise tax of 5%. Anyone thinking of slimming or facial massage? You better think it twice guys.
TRAIN also increased in varying amount the Documentary Stamp Tax (DST) for all legal documents, such as Shares of Stocks, Land Title Certificates issued by Registry of Deeds, Life insurance policies, Pre-need Plans certificates, and all other certificates needed in legal transactions. Although the Personal Income Tax exemption was increased to P250,000.00, yet some items that were previously deducted to arrive at taxable income had been removed, such as the personal exemption of P50,000, additional exemption of P25,000 per dependent child, and the premium for health and hospitalization insurance of P2,400 per year.
And, how about the Pantawid Pamilyang Pilipino Program(4Ps), adopted by the previous Aquino government that provides conditional cash grants to extremely poor households to improve their health, nutrition and education particularly of children age 0-14? Report have it that under the TRAIN Law, this Social Development Program has been phased out, and replaced by a mere subsidy of P 200.00 monthly, instead of the P500.00 monthly health grant per household, and P300.00 education grant per child.
So, what changes that this TRAIN brings to the country? Where does its railway leading to? Eradicating extreme poverty? They shall tell it to the marines! Certainly, let's keep our fingers crossed as we fervently pray that this TRAIN will not totally ruin our country's economy, and submerged more Filipinos in the quagmire of poverty.*