Tax Reform for

Acceleration and
Inclusion Act
Page issues

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 [1]. TRAIN consists of
revisions to the National Internal
Revenue Code of 1997, or the Tax Code
[2]. This reform includes packages that
make changes in taxation concerning the
personal income tax (PIT)[3], 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 [4].
 Tax Reform for Acceleration and
Inclusion Act

Congress of the Philippines

An Act amending Sections 5, 6, 24, 25, 27, 31,

32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86, 90,
91, 97, 99, 100, 101, 106, 107, 108, 109, 110,
112, 114, 116, 127, 128, 129, 145, 148, 149, 151,
155, 171, 174, 175, 177, 178, 179, 180, 181, 182,
183, 186, 188, 189, 190, 191, 192, 193, 194, 195,
196, 197, 232, 236, 237, 249, 254, 264, 269, and
288; creating new Sections 51-A, 148-A, 150-A,
150-B, 237-A, 264-A, 264-B, and 265-A; and
repealing Sections 35, 62, and 89; all under
Republic Act No. 8424, otherwise known as the
 National Internal Revenue Code of 1997, as
amended, and for other purposes
Citation Republic Act No.
10963

Territorial extent Philippines

Enacted by House of
Representatives

Date enacted December 13, 2017

Enacted by Senate

Date enacted December 13, 2017

Date commenced January 1, 2018

Legislative history

Bill introduced in the House Bill No. 5636

House of
Representatives

Bill published on May 15, 2017

Introduced by Dakila Cua

First reading May 15, 2017

Second reading May 31, 2017

Third reading May 31, 2017

Committee report Committee Report No.

229

Bill introduced in the Senate Bill No. 1592

Senate

Bill published on September 20, 2017

Introduced by Aquilino Pimentel III

First reading September 20, 2017

Second reading November 28, 2017

Third reading November 28, 2017

Committee report Committee Report No.

164

Status: In force
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 [5]. 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. [3]
The TRAIN LAW is one of the primary
ways in which the 2020 and 2040 vision
of the Duterte administration is to be
achieved [6], 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 [7]. On the other hand,
unprecedented inflation rates that
exceeded projected calculations[8], 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.[9] [10][11]

Vision and goals of TRAIN

The TRAIN Act aims to address the
reputed weaknesses of the Tax Code,
specifically through the following
objectives[3]:

First, it intends to simplify the previous

system to make it more
straightforward and intuitive.
 Second, it intends to create a more
"just" taxation scheme, wherein
taxation is staggered and distributed
on the basis of financial capability and
the underprivileged are able to reap
more advantages.
Third, it intends to improve the
efficiency by which tax is collected,
particularly tackling issues of
compliance.

The changes instituted by the tax reform

is expected to be able to increase
revenue to finance the infrastructure,
healthcare and education programs of
the Duterte administration.[12] [1] This is
all while expecting to reduce tax remitted
by the poor and receiving a greater
portion of revenues from the wealthiest
in the population through personal
income and consumption taxes. The tax
received from the latter will also
subsidize, through unconditional cash
transfers, the poorest 10 million
households who will not benefit from
increased take-home pay as a result of
lower income taxes.

In the long term, TRAIN Act is just the

first from a series of tax reforms, as part
of the CTSP, which will be one of the
principal means by which the 2020 and
2040 vision of the incumbent
administration is to be achieved. The
vision in 2020 is that poverty will be
reduced from 21.6% to 14%, while 2040
sees the Philippines as having
“eradicated extreme poverty”, established
“inclusive economic and political
institutions where everyone has equal
opportunities” and achieved “high-
income country status” [3]. This can be
achieved if economic growth can be
sustained by at least 7% each year and if
the source of growth can be shifted to
investment from consumption. This
means prioritizing investments on people
through "health, education, life-long
training, social protection, infrastructure,
and research and development" and
investments on infrastructure to boost
productivity [13]

Legislative history
House of Representatives

House Bill No. 4774 is credited as the

original measure that led to the TRAIN
Act. It was endorsed by the Department
of Finance (DOF) to the Philippine House
of Representatives in September 26,
2016 as the first package of a wider
CTRP.[14] It was filed before the
legislature on January 17, 2017 by
Congressman Dakila Cua[15] of Quirino.
Cua is also the chairperson of the Ways
and Means Committee of the Congress
which deals on taxation.[14]

After thirteen hearings which was done

within the span of four months, the
House Bill No. 7890 was consolidated
with 54 other tax-related bills to come up
with a House Bill 5636, a substitute bill
which had "moderate" changes from
House Bill 4774. The substitute measure
was approved on May 8.[14]

The DOF requested President Rodrigo

Duterte to declare the bill as "urgent" on
May 29, 2017. Bills passed on the second
reading by the Congress but are not
certified "urgent" by the president could
only be voted upon after copies of the
given measure is provided to House of
Representatives members three days
before the day of the third and final
reading.[14]On May 31, 2017 just before
the 17th Congress adjourn its first
regular session, the bill passed the final
reading with 246 voting for and 9 against
the bill. Only one made an abstention.
Most of those who opposed were from
the Makabayan bloc.[16]

Senate

A version of the bill was filed in the

Senate on March 2017 by Senate
President Aquilino Pimentel III. By May
2017 six public hearings were conducted
by the senate. The Senate had to wait for
the House of Representatives version to
get pass before it could start plenary
discussions like other bills on budget or
tax and appropriations. The Senate voted
17-1 to approve the Tax Reform
Acceleration and Inclusion (TRAIN) bill,
with Sen. Risa Hontiveros being the lone
dissenter on Nov 28, 2017. On the
succeeding voting for the TRAIN, the
positive votes were cast by Senators
Sonny Angara, Nancy Binay, Frank Drilon,
JV Ejercito, Chiz Escudero, Win
Gatchalian, Dick Gordon, Gringo
Honasan, Loren Legarda, Joel Villanueva,
Koko Pimentel, Grace Poe, Ralph Recto,
Tito Sotto, Cynthia Villar and Migs Zubiri.
The negative votes were cast by
Senators Ping Lacson, Risa Hontiveros,
Bam Aquino and Antonio Trillanes IV[14]

Duterte's certification of the TRAIN as

"urgent" allowed the bill to get passed the
second reading[17] on November 28,
2017.[18] Within the same day, the Senate
bill passed the third and final reading
with 17 senators voting for the bill.[19]
Only Risa Hontiveros voted against the
bill.[17]

Bicameral Conference
Committee

The Bicameral Conference Committee

consolidated the bills passed by the
House of Representatives and the
Senate. The committee then approved a
bill which favored the Senate version on
December 11, 2017 and prepared a
report after for ratification of both
chambers of the Congress and signing of
the President.[20]

the House of Representatives and the

Senate ratified the version of the bill
prepared by the Bicameral Conference
Committee on December 13, 2017.[21]

Signing into law and partial

veto

President Duterte exercised his veto

power to void 5 provisions of the law. The
provisions vetoed were the following:

1. Reduced income tax rate of employees

of Regional Headquarters (RHQs),
Regional Operating Headquarters
(ROHQs), Offshore Banking Units (OBUs),
and Petroleum Service Contractors and
Subcontractors;
2. Zero-rating of sales of goods and
services to separate customs territory
and tourism enterprise zones;
3. Exemption from percentage tax of
gross sales/receipts not exceeding five
hundred thousand pesos (P500,000.00);
4. Exemption of various petroleum
products from excise tax when used as
input, feedstock, or as raw material in the
manufacturing of petrochemical
products, or in the refining of petroleum
products, or as replacement fuel for
natural gas fired combined cycle power
plants; and
5. Earmarking of incremental tobacco
taxes.[1]

Summary of amendmentis

These were the revisions made to the

Tax Code [22]:

5, 6, 24, 25, 27, 31, 32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86, 90, 91, 97, 99, 100,
Amended 101, 106, 107, 108, 109, 110, 112, 114, 116, 127, 128, 129, 145, 148, 149, 151, 155,
Sections 171, 174, 175, 177, 178, 179, 180, 181, 182, 183, 186, 188, 189, 190, 191, 192, 193,
194, 195, 196, 197, 232, 236, 237, 249, 254, 264, 269, and 288

Created
51-A, 148-A, 150-A, 150-B, 237-A, 264-A, 264-B, and 265-A
Sections

Repealed
35, 62, and 89
Sections
Complementary measures
There are four (4) complementary
measures undertaken to ensure the
income from the TRAIN Law will be
properly allocated for the development of
the Philippines as a nation. These are the
Tax Administration, Ear Making,
Infrastrucutre Projects, and Social
Programs.[23]

Tax Administration

Steps to modernize and refine the tax

administration processes are undertaken
to support the changes in tax policy so
as to improve security against tax crimes
and to ensure taxpayer compliance. On
top of improving electronic systems (e.g.
eBIR forms, Electronic Filing and
Payment System, mobile payments) the
following reforms are implemented [23]:

Mandatory fuel marking

Provision for use of electronic receipts
Connection of cash registers and point
of sale machines to BIR servers for
real time reporting of sales and
purchase data
Relaxation of bank secrecy laws and
automatic exchange of information to
allow for more effective prosecution of
criminal cases

Ear Marking
For 5 years from the law's enactment, all
revenues will be set aside for
infrastructure and social programs only,
with a 70% and 30% portion respectively.

Infrastructure Projects

Infrastructure projects that will receive

priority funding include the Build, Build,
Build Program that tackles the problem
of congestion through the construction
of public transport systems and road
networks and the refurbishing and
enhancing of military facilities.
Additionally, part of the 70% will be
allocated to the building of sports
facilities in public schools as well as
amenities that will allow access to
potable water in public spaces.[23]

Social Pograms

The social programs that will receive

priority funding from 30% of revenues
include[23]:

Programs for sugar farmers to

increase productivity, provide livelihood
opportunities, develop alternative
farming systems, and enhance
farmer’s income
Social mitigating measures and
investments in education, health,
social protection, employment, and
 housing for poor and near-poor
households
Unconditional cash transfer to the
poorest 10 million households
Social benefits card to determine
qualified beneficiaries (fuel vouchers
for PUJs, fare discount for all public
utility vehicles, discounted purchase of
NFA rice, free skills training under
TESDA)

Unconditional cash transfers

(UCT)

In order to provide provisional protection

for vulnerable households from the initial
shock of the TRAIN Law, unconditional
cash transfers are dispensed. On the first
year, beneficiaries receive Php200 per
month. In the succeeding 2 years, they
receive P300 per month. The UCT is
obtained from oil excise tax revenues. In
addition to the UCT, social welfare cards
are provided to aid in continuous
conferring of benefits and subsidies to
the poorest households. This includes
subsidies for "medicine, transportation,
rice, and vocational trainings". [23]

Key provisions
Package One

The overarching goal of the first package

of the TRAIN is to "create a simpler, fair,
and more efficient system"[5]. Through
this program, the richer tax payers of the
Philippines will pay a greater contribution
to enable the government to execute its
programs and services targeted to the
general improvement of the country,
especially the less fortunate.[5][24] There
are six (6) main key provisions, three (3)
additional excise taxes, and four (4)
financial taxes.[25]

Lowering the Personal Income

Tax

"The TRAIN lowers the Personal Income

Tax (PIT)for all taxpayers except the
rich"[5]. Effectively, personal taxes will be
reduced for 99% of the Philippine tax
payers.

The new PIT is summarized in the table

below

Percent of
Annuable Income Tax Tax Rate
Taxpayers

₱0-250,000 0% 83%

Over ₱250,000-400,000 20% of the excess over ₱250,000 8%

Over ₱400,000-800,000 ₱30,000 + 25% of the excess over ₱400,000 6%

Over ₱800,000- ₱130,000 + 30% of the excess over

2%
2,000,000 ₱800,000

Over ₱2,000,000- ₱490,000 + 32% of the excess over

1%
8,000,000 ₱2,000,000

₱2,410,000 + 35% of the excess over

Over ₱8,000,000 0.1%
₱8,000,000

Additionally, minimum-wage earners are

still exempted from PIT. The Law also
ensures a minimum wage earner who
incurs a small raise will not have his
overall salary (with the PIT deducted)
less than minimum wage. Also, married
couples where both parties are working
may be exempted up to a total of
₱500,000. This does not include the
exemption from the first ₱90,000 of their
thirteenth month pay and additional
bonuses. Finally, Self-emplyed and
professionals with gross sales below
VAT can only pay 8% flat tax instead of
their income and personal tax.[5]

Simplified Estate and Donor's

Tax

The TRAIN aims to simplify property

purchases, transfers and donations in
order to make the land market more
efficient thus ensuring the usage of
properties is maximized.
The estate tax is now reduced to 6%
based on the net value of the property. It
also has a standard deduction of ₱5
million as well as a ₱10 million
exemption on the family home.

The donor tax is also reduced to 6% of

the net donations for gifts above
₱250,000 yearly.[26]

Simplified Value Added Tax

The government's aim to elevate the less

fortunate in the Philippines and drive
development is exemplified as the TRAIN
repeals 54 out of 61 of the non-essential
VAT exemption. In order to protect these
less fortunate persons, as well as small
and micro businesses, they are exempted
from VAT on goods and services of
marginal establishments. VAT exempt
tax payers now have the option to:

PIT schedule with 40% OSD on gross

receipts or gross sales plus 3%
percentage tax
PIT schedule with itemized deductions
plus 3% percentage tax, or
Flat tax of 8% on gross sales or gross
revenues in lieu of percentage tax and
personal income tax.[24]

"TRAIN aims to clean up the VAT system

to make it fairer and simpler and lower
the cost of compliance for both the
taxpayers and tax administrators". [24] As
such, VAT exemptions are now only
limited to health, education and raw
agriculture food. In 2019, medicines for
hypertension, high cholesterol and
diabetes will be exempted from VAT.
Similarly, purchases from senior citizens
and persons with disabilities. Housing
that costs less than ₱2 million shall also
be exempted starting in 2021.

Excise Tax of petroleum

products

This tax aims to increase efforts towards

decreasing the consumption of harmful
fuel, and veering towards a healthier,
more sustainable future. The price of fuel
also varies due to the global inflation of
oil.[27] Listed below is the effect of the
Petroleum Excise Tax (note: the
additional excise tax is per liter)[28]

Excise Tax per Liter Current 2018 2019 2020

LPG ₱0 ₱1.00 ₱2.00 ₱3.00

Diesel ₱0 ₱2.50 ₱4.50 ₱6.00

Regular and unleaded premium gasoline ₱4.35 ₱7.00 ₱9.00 ₱10.00

Listed below are the new excise taxes for

specific fuel products for the year 2018

Petroleum Product Excise Tax per Liter

LPG ₱1.00

Bunker Fuels ₱2.50

Diesel ₱2.50

Petcoke ₱2.50

Kerosene Php3.00

Aviation gas ₱4.00

Gasoline ₱7.00

Naphtha ₱7.00

Asphalt ₱8.00

Asphalt ₱8.00

Lubricating oil ₱8.00

Paraffin wax ₱8.00

Refined fuels ₱8.00

Excise Tax of Automobiles
increase

The table below summarizes the excise

taxes on automobiles. The second
column illustrates the tax rate on
vehicles based on their specific price
range. The third column portrays the
actual average effective tax rate.
Because the TRAIN law increases the PIT
of 99% of the population, their increase in
net income will still be more than enough
to compensate for the effects of the
excise tax on automobiles. This means
they still benefit from the TRAIN as they
incur additional disposable income in the
end. In addition, because richer tax
payers tend to purchase more cars, the
additional revenue from this tax will
mostly come from them.[29]

Automobile prices Tax Rate Average effective tax rate

₱600,000 and below 4% 3%

₱600,000 to ₱1,000,000 10% 8%

₱1,000,000 to ₱4,000,000 20% 15%

₱4,000,000 and above 50% 30%

Excise Tax on Sweetened

Beverages

"The SSB (Sugar-Sweetened Beverages)

tax will promote a healthier
Philippines".[30] It achieves this by
reducing the increasing number of
diabetes and obesity cases, through
raising awareness, promoting the
consumption of healthier products and
encourage companies to innovate
healthier alternatives.[30]
TRAIN imposes new taxes of ₱6 per liter
on drinks containing sweeteners and
₱12 per liter on drinks containing high-
fructose corn syrup. Milk, 100% natural
juice and 3-in-1 instant coffee drinks are
exempt from the excise tax.[30]

Additional Excise Taxes

There are three additional excise taxes,

namely coal, cosmetics and tobacco.[25]

Coal Excise Tax

Coal is a cheap source for power

generation and has its uses in multiple
industries such as the chemical and
pharmaceutical industries. It is also a
prime ingredient for activated carbon,
carbon fibre and silicon metal.[31]
However, it remains a major source for
air pollution in the Philippines. The aim of
the excise tax is to shift towards
renewable energies and generate
additional income for building
infrastructures and social services. The
excise tax on coal will increase from its
original ₱10/Metric Ton(MT) to ₱50/MT
on both domestic and imported coal.
₱50/MT will be added each succeeding
year until January when the rate would
have reached ₱150/MT.[25]

Cosmetics Tax
Starting 2018, all cosmetic surgeries,
aesthetic procedures, and body
enhancements intended to improve, alter,
or enhance a person’s appearance are
now subject to a tax of 5%.

However, procedures necessary to

ameliorate a deformity arising from, or
directly related to a congenital or
developmental defect or abnormality, a
personal injury resulting to an accident or
trauma, or disfiguring disease, tumor,
virus or infection are tax -exempted.[25]

Tobacco Tax

The excise tax on cigarettes aims to

reduce the amount of smokers and
respiratory and cardiovascular diseases
one can catch from the act, as well as
generate additional revenue for health
oriented programs and services.

From its original excise tax of ₱30 in

2017, the tax on tobacco increased to
₱32.50 on January 1, 2018, ₱35 on July
1, 2018, will increase to ₱37.50 on
January 1, 2019, and ₱40 on January 1,
2020. Afterwards, it will increase
annually by 4% from January 1, 2024.[25]

Financial Taxes

There are four taxes that were adjusted

along with the TRAIN Law. Firstly, the
documentary stamp tax was increased
by 100% except on loans with only 50%
increase, but not for savings, property,
and non-life insurance. Secondly, the final
tax on foreign currency deposit unit
(FCDU) was increased from 7.5% to 15%
of interest income. Thirdly, capital gains
tax of non-traded stock was increased
from 5% to 10% of final net gains. Finally,
the stock transaction tax was increased
from 0.5% to 0.6% of total transaction
value.[25]

Others

Finally, there are three additional taxes

that do not fall under the aforementioned
categories. These are the tax on lottery
winnings and PCSO prizes, documentary
stamp tax, and mining tax. With the
implementation of the TRAIN Law, all
PCSO lotto prizes are taxed at 20% if the
prize exceeds ₱10,000. The documentary
stamp tax has been doubled, resulting in
stamp taxes ranging from ₱1.50 to
₱3.00. Finally, excise tax rates on all non-
metallic minerals and quarry resources,
and all metallic minerals including
copper, gold and chromite, will be
doubled, from 2% to 4%, ss well as excise
tax on on indigenous petroleum, which
will be doubled from 3% to 6%.[32][33][34]

Projected effects
The three main categories the TRAIN
Law affects with its first package are
"Growth in the Economy", "Employment
Generation", and "Effect on Inflation". The
DOF projects the economy to grow by
1.3% by 2022 with a 0.42% inflation due
to the excise tax increase (this is still
within the 2-4% target inflation by the
Bangko Sentral ng Pilipinas (BSP); it also
predicts to create half a million jobs over
the next ten years, and eight million over
the entirety of its life, as well as lift
250,000 Filipinos out of poverty. Through
the increase in excise tax, Package 1 will
be able to generate Php134 Billion.[13].
The actual effects in 2018 are elaborated
below.
Economic growth

For the first quarter of 2018, the

government was able to raise ₱619.84
billion. This represents a 16.4% growth in
revenue compared to the first quarter of
2017. In monetary terms, the government
was able to raise ₱87.44 billion more in
this quarter of 2018 compared to the
previous year. "The Philippine economy
expanded by 6.8 percent in the first
quarter of 2018, making it still one of the
fastest-growing economies in the region
even as rising inflation reduced
consumption and productivity in some
sectors."[7] DOF Secretary Carlos
Dominguez III claimed tax revenues grew
by 18.2%, "exceeding the 9.7 percent
nominal gross domestic product (GDP)
growth."[7]

Departments that saw immediate

benefits from Package 1 include the
Bureau of Internal Revenue and Bureau
of Customs, both with a 14.2% and 24.7%
increase in revenue. This translates to a
total of ₱423.1 billion and Php129.8 for
both departments respectively. Other
government departments were able to
expand their investment and growths
during the first quarter as well due to the
increase in income.

Insofar as expenditures go for the first

quarter of 2018, the total amounted to
₱782.0 billion, growing by 27.1%, which
also outstripped the 9.7% nominal GDP
growth due to the estimated 40.0%
increase in capital outlays. Dominquez
also said that the expenditure effort also
rose by 2.73%, which is the highest
increase since 2003. This results in a
larger contribution towards GDP growth.
As such, revenue effort grew by 0.91%. In
addition, public construction expanded
by 25.1%, thus boosting GDP growth by
0.4%. On the other hand, government
consumption increased by 13.6%,
contributing an incremental 1.4% to the
growth of the GDP."'Strong
macroeconomic fundamentals backed
by tax reforms and the Build, build, build
program will continue to boost economic
growth to the optimum 7-8 percent level
as the competitiveness of the economy
rises and more jobs are created,' he
said."[7]

Inflation

"The inflation rate in June—which

exceeded both government and market
expectations—was the fastest pace in at
least five years. Year-to-date, inflation
averaged 4.3 percent, above the BSP’s 2-
4 percent target range."[8]"It peaked at 5.2
percent for the same month. For the
previous months, inflation was pegged at
4.6 percent and in the same period in
2017, 2.5 percent."[35]

This was primarily due to the higher

annual rate posted in the heavily-
weighted food and non-alcoholic
beverages index at 6.1%. The country's
food index went up by 5.8% in June 2018.
It was 5.5% in the previous month and
3.1% in June 2017. The following annual
mark-ups were also observed for the
following food groups

Rice (4.7%)
Corn (14.1%)
Other Cereals, Flour, Cereal
Preparation, Bread, Pasta and Other
 Bakery Products (2.4%);
Meat (5.0%);
Vegetables (8.6%);
Sugar, Jam, Honey, Chocolate and
Confectionery (3.9%); and
Food Products not Elsewhere
Classified (3.1%).

As for the rest of the food groups, they

either slowed down or remained at their
previous month's rate.[35]

Socioeconomic Planning Secretary

Ernesto Pernia claims that the inflation
will most likely peak on the third quarter
of the year and start tapering off by
October.[8]
Reception
The TRAIN Law finally took effect in
January 2018. Since its implementation,
there have been numerous individuals for
and against the new tax reform, such as
Budget Secretary Benjamin Diokno who
has expressed support for the law as the
additional revenues provide funds for
government initiatives.[36]. Notable
government figures in opposition of the
current law, that is they are calling for
ammendments or suspensions to
specific excise tax increases or to the
law as a whole, include Sen. Risa
Hontiveros, Sen. Bam Aquino and Sen.
Grace Poe.[11][10] Ultimately, President
Duterte stated on June 02 2018 "Well the
law was enacted by Congress. I leave it
to Congress to decide whether or not to
amend, suspend or modify the law. Leave
it to Congress", in a press briefing.[36]

Support and Opposition

Support

The senators who voted for the bill were

Senators Sonny Angara, Nancy Binay,
Frank Drilon, JV Ejercito, Chiz Escudero,
Win Gatchalian, Dick Gordon, Gringo
Honasan, Loren Legarda, Joel Villanueva,
Koko Pimentel, Grace Poe, Ralph Recto,
Tito Sotto, Cynthia Villar and Migz Zubiri.
Appeal to foreign investors

One of the goals of the TRAIN law is to

make the economic environment of the
Philippines more appealing to foreign
investors. The reforms being
implemented by the Duterte
administration have been recognized and
lauded by international institutions,
leading to strong investor confidence and
better growth prospects for the
economy.[37] This is also being pushed
forward by the Department of Finance by
submitting it’s proposal for Package 2 of
it’s tax reform program to congress
which aims to reduce corporate income
tax rates and rationalize fiscal
incentives.[38]

View from an economic stand

point

According to the DOF’s chief economist,

Gil Beltran, the moderate rise in inflation
is only temporary and remains
manageable under a robust economy
even with the implementation of the
TRAIN law. It will be remedied by the
increased spending on infrastructure and
social services to keep inflation in check
in the future which was what the
president was hoping to achieve with the
implementation of this law. TRAIN is
seen as a long-term measure that would
hope to push the economy to a much
higher development path, create more
jobs and improve the living conditions for
our people. However this comes with the
rising of inflation which would be
mitigated by lower income tax rates and
implementing cash transfers for the
short-term, and; the health, education,
social protection, and infrastructure
programs in the medium- and long-
term.[37]

Opposition

Burden to the Poor

One of the recurring problems that is
being discussed when it comes to the
TRAIN law is the burden that it will
impose to the poor. As crafted, the TRAIN
promises to let marginal earners and
minimum salaried workers of smaller tax
or even tax exemption. But critics are
quick to point out that the alleged
windfall of tax-free income will be blown
away when basic commodities that the
marginalized sector of society
traditionally buy and consume every day
will now be sporting increased price tags
that are out of reach and beyond the
imagination of poor families.[39]

Makabayan Bloc
There were objections made by the
Makabayan Bloc, a leftist group whom
filed a petition for a temporary restraining
order (TRO) against the law. The petition
is anchored on the argument that the tax
law bill was invalid because there was no
quorum when the House of
Representatives ratified the joint
bicameral conference report on the
measure, and there was no voting
involved. The petitioners provided links to
official videos and photos that would
show there was no quorum “with barely
10 people on the floor.” The petitioners
also provided that another requirement
was not met which was the majority vote.
According to the petitioners, a vote
whether viva voce or nominal, was not
taken. The official video of the process
shows Tinio and Zarate repeatedly
objecting to the ratification, but Abu and
Defensor continued with the process
until the voices of the petitioners were no
longer heard because the microphone
had been turned off. Aside from the
House rules, the petitioners said Section
16(2), Article VI of the Constitution that
requires a quorum was also violated. [40]

Call for Suspension

Three senators called for the suspension

of the implementation of Republic Act
No. 10963 or the Tax Reform for
Acceleration and Inclusion (Train) law as
consumers and transport groups
complained of soaring prices of
commodities. These were on the
grounds that the law was not beneficial
to the majority of Filipinos, due to the
increase in prices of oil products and
commodities, a family has incurred an
additional expense of ₱2,644 monthly for
farmers and ₱3,640 for workers. [41]

Amendments

Senator Bam Aquino wanted to pass a

measure that seeks to amend TRAIN to
protect Filipinos from soaring prices.
Aquino explained that the Senate’s
version of the TRAIN law had a safeguard
that would automatically suspend fuel
excise tax if the forecast rate was
exceeded and this amendment was to
bring that sole safeguard back.
According to the senator, this was a
necessary step in order to protect the
future well beings of the Filipino
people.[42]

References
1. https://www.dof.gov.ph/index.php/ra-
10963-train-law-and-veto-message-of-the-
president/ This article incorporates text
from this source, which is in the public
domain.
2. https://www.pwc.com/ph/en/tax-
alerts/assets/pwcph_tax-alert-34.pdf
3. http://www.dof.gov.ph/taxreform/
4. Inc., Primer Media. "TRAIN Package
One: A Need-To-Know Guide to Republic
Act 10963" .
5. "Package One - Lowering the Personal
Income Tax • #TaxReformNow" .
6. http://www.dof.gov.ph/taxreform/
7. "TRAIN law raises gov't revenue by
16.4% in Q1" .
8. "NEDA: June's 5.2% inflation
'unexpected' - Philstar.com" .
philstar.com.
9. "Makabayan bloc asks SC to strike
down tax reform law" .
10. Jr., Nestor P. Burgos. "3 senators call
for suspension of Train law" .
11. Esguerra, Anthony Q. "Bam Aquino
rallies support for passage of TRAIN law
amendment" .
12. "About the Tax Reform - What is
TRAIN? • #TaxReformNow" .
13. "About the Tax Reform - Impact of the
Tax Reform • #TaxReformNow" .
14. "PRRD certifies tax reform bill as
urgent • #TaxReformNow" . Department
of Finance. Retrieved 22 December 2017.
15. "Tax Alert No. 8 - House Bill on Tax
Reform for Acceleration and Inclusion"
(PDF). PwC. Retrieved 22 December 2017.
16. Dizon, Nikko (31 May 2017). "House
passes Duterte's tax reform package on
final reading" . Philippine Daily Inquirer.
Retrieved 22 December 2017.
17. Romero, Paolo (29 November 2017).
"Senate rushes to approve tax reform
bill" . The Philippine Star. Retrieved
22 December 2017.
18. Lingao, Amanda; Lardizabal, Cecille
(29 November 2017). "Senate OKs tax
reform bill on final reading" . CNN
Philippines. Retrieved 22 December 2017.
19. "Senate approves tax reform bill on
3rd reading" . The Manila Times. 28
November 2017. Retrieved 22 December
2017.
20. Dela Cruz, Jovee Marie; Fernandez,
Butch (11 December 2017). "TRAIN
passes with Senate having its way in
bicam" . Business Mirror. Retrieved
22 December 2017.
21. Dalangin-Fernandez, Lira (13
December 2017). "House, Senate ratify
TRAIN tax bill" . InterAksyon. Retrieved
22 December 2017.
22. Juris, The Corpus (19 December
2017). "R.A. No. 10963: Tax Reform for
Acceleration and Inclusion (TRAIN)" .
23. "Package One - Complementary
Measures • #TaxReformNow" .
24. "Package One - Simplified Value-
Added Tax (VAT) system •
#TaxReformNow" .
25. "Package One - Additional Excise and
Other Financial Taxes •
#TaxReformNow" .
26. "Package One - Simplifying Estate and
Donor's Tax • #TaxReformNow" .
27. "Package One - Increasing the Excise
Tax of Petroleum Products •
#TaxReformNow" .
28.
https://www.bir.gov.ph/images/bir_files/in
ternal_communications_1/Full%20Text%2
0RR%202018/RR%20No.%202-
2018/RR%20No.%202-2018.pdf
29. "Package One - Increasing the Excise
Tax of Automobiles • #TaxReformNow" .
30. "Package One - Excise Tax on
Sweetened Beverages •
#TaxReformNow" .
31. "Uses of coal" . World Coal
Association.
32. "10 TRAIN Tax Reform Items that You
Probably Didn't Know -
PinoyMoneyTalk.com" . 10 January 2018.
33. INQUIRER.net. "Lotto not spared from
TRAIN tax on winnings" .
34. bw_mark. "Mining tax and TRAIN -
BusinessWorld" . bworldonline.com.
35.
http://psa.gov.ph/statistics/survey/price/
summary-inflation-report-consumer-price-
index-2012100-june-2018
36. News, ABS-CBN. "Duterte: Let
Congress decide on TRAIN Law" .
37. "Inflation manageable with TRAIN,
says DOF chief economist •
#TaxReformNow" . #TaxReformNow.
2018-05-20. Retrieved 2018-07-15.
38. Manhit, Dindo. "TRAIN: risk or
opportunity?" . Retrieved 2018-07-15.
39. " 'TRAIN' advocates and supporters
are insensitive to the cries of the poor" .
Manila Bulletin News. Retrieved
2018-07-15.
40. "Makabayan bloc asks SC to strike
down tax reform law" . Rappler. Retrieved
2018-07-09.
41. Jr., Nestor P. Burgos. "3 senators call
for suspension of Train law" . Retrieved
2018-07-09.
42. Esguerra, Anthony Q. "Bam Aquino
rallies support for passage of TRAIN law
amendment" . Retrieved 2018-07-09.

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