Negative Effects of

TRAIN LAW
(Tax Reform for Acceleration and
Inclusion R.A.10963.)
According to the studies of the researchers at the
Philippine Institute for Development Studies (PIDS),
shows that TRAIN worsened the plight of millions of
Filipinos. 
Despite of its importance TRAIN likely worsened
poverty and income inequality in the country.

The studies contend that the reduction in income tax

is rendered meaningless because of its disadvantages
or negative effects in our economy.
Negative Effects of
TRAIN LAW
Increase Inflation

Worsen Poverty.

Income Inequality
Higher Revenue Losses
Increase Inflation

“As general prices rise, the purchasing power of consumers decreases”

The truth is that the imposition of additional taxes by the government are passed down to the middle,
and lower income class people, and thereby increasing the rate of inflation.

The inflation rate in the Philippines has massively increased leaving a historical mark of 6.7 percent
last October 2018.

According to the Philippine Statistic Office poverty incidence among Filipinos in 2015 was estimated
at 21. 6 percent that is not included in income tax exemption. Millions of the country’s poorest will be
burdened by higher prices on basic goods and services. Majority of the Filipinos do not get any
income tax benefits from train since some engage in informal work with low and irregular incomes.
Worsen Poverty

Due to drastic surge of inflation to record highs, it was evident that TRAIN aggravated the difficulties of millions
of lower-income households in Filipinos that includes fisher folk farmers and other poorer sectors of the society.
This impact was primarily due to high excise taxes collected on coal, oil and petroleum products.

One of the major criticisms is the imposition of higher taxes on cars and automobiles , fuel, electricity, medicine,
consumer goods, cosmetics; documentary stamps, foreign currency deposits and prime commodities. the prices of
gasoline and fuel products are expected to increase by three to four pesos per liter.  

In turn, the marked increase in fuel prices will trigger a corresponding increase in the cost of
transporting people and goods, which will inevitably increase the prices of practically everything
else.  Moreover, the labor sector will demand an increase in wages, which will also add to the cost
of manufacturing goods and the delivery of services. 
Moreover, the tax on sweetened
beverages using purely caloric
sweeteners and purely non
caloric sweeteners has added
Php6.00 per liter of volume
capacity, and Php12.00 vat has
added on sweetened beverages
using purely high fructose corn
syrup .

Some of these beverages are

sweetened tea, flavored water
,all carbonated beverages,
energy and sports drinks, cereals
and grains, same as with
cigarettes and on mineral
products like coal and minerals .
Income Inequality

The TRAIN law adversely impacted the poorest households that required the government to assist
them with the help of unconditional cash transfers of around P300 to P400 per month for the
coming 3 to 4 years.

Proponents used to trumpet that TRAIN would improve the tax system’s “progressivity,”
meaning TRAIN will at once go harder with the incomes of the rich and go easier on the
incomes of the poor. At best, tax reform can indeed be a potent tool for government to level the
incomes of the rich and poor. Yet data suggest the opposite happened with TRAIN.

Due to income inequality, the law went harder on the salaries of the rich man and A few
excise taxes of TRAIN were made to favor the rich sections of the society at the cost of the
poor. Lower donor’s taxes, and estate benefited several rich, and elite families and the poor
section end up losing throughout this tax reform package.
Higher revenue losses

The reform led to high loss of revenue for the government. According to the
Family Income and Expenditure Survey, the losses are estimated to be around
P210 billion in 2018, P223 billion in 2019 to 2022; P238 billion in 2023.