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Minimum Wage: Tax Reform For Acceleration and Inclusion Train Act Republic Act No. 10963

The TRAIN Act reforms taxation in the Philippines by exempting individuals earning less than 250,000 PHP annually from income tax, and instituting a progressive income tax for higher earners. It also raises some consumption taxes to offset lost revenue from income tax exemptions. While the law aimed to boost the economy and reduce poverty, its implementation in 2018 led to higher than expected inflation that impacted many. This resulted in calls to amend the law to protect vulnerable groups from rising prices.

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マルガリータ 美
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32 views

Minimum Wage: Tax Reform For Acceleration and Inclusion Train Act Republic Act No. 10963

The TRAIN Act reforms taxation in the Philippines by exempting individuals earning less than 250,000 PHP annually from income tax, and instituting a progressive income tax for higher earners. It also raises some consumption taxes to offset lost revenue from income tax exemptions. While the law aimed to boost the economy and reduce poverty, its implementation in 2018 led to higher than expected inflation that impacted many. This resulted in calls to amend the law to protect vulnerable groups from rising prices.

Uploaded by

マルガリータ 美
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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INTRODUCTION

The Tax Reform for Acceleration and Inclusion(TRAIN) Act, officially cited as Republic Act
No. 10963, is the initial package of the Comprehensive Tax Reform Program (CTRP) signed
into law by President Rodrigo Duterte on December 19, 2017. TRAIN consists of revisions to
the National Internal Revenue Code of 1997, or the Tax Code. This reform includes packages
that make changes in taxation concerning the personal income tax (PIT), estate tax, donor's tax,
value added tax (VAT), documentary stamp tax (DST) and the excise tax of petroleum products,
automobiles, sweetened beverages, cosmetic procedures, coal, mining and tobacco.

The prominent feature of the tax reform is that people who earn ₱250,000 annually or
₱21,000 monthly and below are exempted from paying personal income tax (PIT). This
includes minimum wage earners, who were also exempted in the former tax system. On
the other hand, those earning over ₱250,000 have tax rates following a set PIT
schedule. Essentially, greater income is taxed at higher tax rates This denotes that low
to middle income-earners get to have a higher take home pay, while high income-
earners have a bigger contribution to tax revenues. Increase in consumption
taxes intend to counterbalance PIT tax exemptions.
The TRAIN LAW is one of the primary ways in which the 2020 and 2040 vision of
the Duterteadministration is to be achieved, and so, it had optimistic projections about
its effect on the economy, development and poverty alleviation in its inception.
Regardless, contentions about the passing of this law has been present since the
beginning and the subsequent reception by the people since its ratification has been
controversial. In the first quarter of 2018, both positive and negative outcomes have
been observed. The economy saw an increase in tax revenues, government
expenditure and an incremental growth in GDP On the other hand, unprecedented
inflation rates that exceeded projected calculations, has been the cause for much
uproar and objections. There have been petitions to suspend and amend the law, so as
to safeguard particular sectors from soaring prices.

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