The Effects of TRAIN Law to the Philippine Economy

Tax Reform for Acceleration and Inclusion Act or TRAIN law is a law that pushes for a big change
on the tax scheme in the Philippine setting. The tax reform it introduces are lower personal income tax
and higher consumption tax. Taxpayers with taxable income not exceeding Php 250,000 annually are
exempted from income tax. On the other hand, it has increased the consumption taxes, in the form of
excise tax on tobacco products, petroleum products, automobiles, and additional excise tax on
sweetened beverages and non-essential, invasive cosmetic produces. It has also expanded the VAT base
by repealing exemption provisions in numerous special laws. With all of this tax reform, will it benefit or
worsen the Philippine Economy?

The Philippine Economy depends on numerous factors for it to flourish or fail, but ultimately it
banks on the tax revenue that the government is getting to check and balance the growth of the
country. With this being said, the tax reform introduced by TRAIN law created an impact with our
economy itself. First, it has lowered the personal income tax thus exempting a big chunk of taxpayers to
the equation since a lot of the workforce are minimum wage earners. Although it has increased the tax
paid by those who earned way above minimum still it has not balanced the scale of the tax collected
from the workforce of our country. However, as mentioned, it increased consumption tax which I think
made a balance to the tax and even further giving the government a bigger revenue with the tax
collected. The law may have exempted the minimum wage earners from the tax bracket but the
deficiency on the tax collected from the earners exempted was passed on to all of us thru the increased
in the consumption tax. It simply distributed the burden further to all of us and benefitting a few. The
Economy might not be affected directly but it will create an impact on how people moves within the
economy. This law also affects workers and manufacturers of the products who were reformed to have
a higher tax. It will be hard for them to compete in the market since their product will be more
expensive due to the higher tax. It may cause them to budget cut or downsizing which will greatly affect
the economy itself.

With this realization, I think TRAIN law just shifted some scale weight to different sectors of the
taxpayers to give way for a more “relaxed” tax bracket for the small time earners and giving it to the big
time earners. Although, a counter scale weight was given to everyone, in the form of a high excise tax,
so that the government won’t be have a deficiency on the tax collection even with the chance in the tax
bracket. It may have even increased the tax collected generally. Overall, this law affected the Philippine
Economy by changing the behavior and the movement of the people in the country itself and it has yet
to be more reformed since there will be more TRAIN laws coming into play in the years to come.