THE TAX REFORM FOR ACCELERATION AND INCLUSION (TRAIN) ACT.

President Rodrigo Roa Duterte signed into law Republic Act No. 10963, otherwise known as the
Tax Reform for Acceleration and Inclusion (TRAIN) Act, the first package of the Comprehensive
Tax Reform Program (CTRP, on December 19, 2017 in Malacanang.

The TRAIN will provide hefty income tax cuts for majority of Filipino taxpayers while raising
additional funds to help support the government’s accelerated spending on its “Build, Build,
Build” and social services programs.

This tax reform package corrects a longstanding inequity of the tax system by reducing personal
income taxes for 99 percent of taxpayers, thereby giving them the much needed relief after 20
years of non-adjustment of the tax rates and brackets. This is the biggest Christmas and New
Year gift the government is giving to the people.

For the poorest 10 million households, the government is giving them targeted cash transfers of
PHP 200 per month in 2018 and P300 per month in 2019 and 2020, sourced from higher
consumption taxes that the rich will contribute, as well as better social services, healthcare, and
education. All these will prepare the people for better job opportunities.

In a separate message, President Duterte has vetoed certain provisions of the TRAIN. The
vetoed five line items are the following provisions:

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.

The TRAIN raises significant revenues to support the President’s priority social and
infrastructure programs, which will help realize his administration’s goal of reducing the poverty
rate from 21.6 to 14 percent by 2022. Some 70 percent of the incremental revenues will help
fund the government’s infrastructure modernization program, while the balance will go to social
services.
Starting 2018, the government expects to raise funds equivalent to about two-thirds of the
incremental revenues targeted under this tax reform law. The Congress has committed to pass
the rest of the TRAIN’s provisions representing the remaining one-third of the targeted revenues
in early 2018 to help us achieve our revenue and deficit targets.

With the people’s support and understanding, all these reforms will result in more and better
jobs, lower prices, and a brighter future for every Filipino.
What is the
Tax Reform Program?
We are redesigning our tax system to be simpler, fairer, and more efficient for all, while also
raising the resources needed to invest in our infrastructure and our people. We will lessen the
overall tax burden of the poor and the middle class.

The Tax Reform for Acceleration and Inclusion (TRAIN) is the first package of the
comprehensive tax reform program (CTRP) envisioned by President Duterte’s administration,
which seeks to to correct a number of deficiencies in the tax system to make it simpler, fairer,
and more efficient. It also includes mitigating measures that are designed to redistribute some of
the gains to the poor.

Through TRAIN, every Filipino contributes in funding more infrastructure and social services to
eradicate extreme poverty and reduce inequality towards prosperity for all. TRAIN addresses
several weaknesses of the current tax system by lowering and simplifying personal income
taxes, simplifying estate and donor’s taxes, expanding the value-added tax (VAT) base,
adjusting oil and automobile excise taxes, and introducing excise tax on sugar-sweetened
beverages.

What will the tax reform fund?

1. Education

The tax reform will be able to fund investments in education, achieving a more conducive
learning environment with the ideal teacher-to-student ratio and classroom-to-student ratio:
2. Healthcare Services
With the tax reform, we can invest more in our country's healthcare by providing better services
and facilities:

3. Infrastructure Programs
The additional revenue raised by the tax reform will be used to fund the infrastructure program
of the Department of Public Works and Highways (DPWH), which consists of major highways,
expressways, and flood control projects. Funding these major infrastructure projects is possible
with tax reform for our country to sustain high and inclusive growth.
The proposed tax reform program aims to provide the needed additional revenues that would
fund our country’s investment needs, promoting better lives for Filipinos.

Tax Reform for Acceleration and Inclusion Act

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]

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,[3] 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.[6] On the other hand,
unprecedented inflation rates that exceeded projected calculations,[7] 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.

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.
Fourth, it increases the tax burden felt by the general population thus increasing the overall
inflation rate.
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.[11][1] The
notion that the poor will be taxed less than the wealthy population is actually a propaganda
widely spread by the government, the additional taxes imposed by the government will just be
passed down through the lower and middle income class thus increasing the inflation.
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

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 on
September 26, 2016 as the first package of a wider CTRP.[13] It was filed before the legislature
on January 17, 2017 by Congressman Dakila Cua[14] of Quirino. Cua is also the chairperson of
the Ways and Means Committee of the Congress which deals on taxation.[13]

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.[13]

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.[13] 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.[15]

Senate
A version of the bill was filed in the Senate in 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[13]

Duterte's certification of the TRAIN as "urgent" allowed the bill to get passed the second
reading[16] on November 28, 2017.[17] Within the same day, the Senate bill passed the third
and final reading with 17 senators voting for the bill.[18] Only Risa Hontiveros voted against the
bill.[16]
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.[19]

the House of Representatives and the Senate ratified the version of the bill prepared by the
Bicameral Conference Committee on December 13, 2017.[20]

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:

Reduced income tax rate of employees of Regional Headquarters (RHQs), Regional Operating
Headquarters (ROHQs), Offshore Banking Units (OBUs), and Petroleum Service Contractors
and Subcontractors;
Zero-rating of sales of goods and services to separate customs territory and tourism enterprise
zones;
Exemption from percentage tax of gross sales/receipts not exceeding five hundred thousand
pesos (P500,000.00);
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
Earmarking of incremental tobacco taxes.[1]
Summary of amendmentis
These were the revisions made to the Tax Code:

5, 6, 24, 25, 27, 31, 32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86, 90, 91, 97, 99,
Amended 100, 101, 106, 107, 108, 109, 110, 112, 114, 116, 127, 128, 129, 145, 148, 149,
Sections 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

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, Infrastructure Projects, and Social Programs.[22]

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:[22]

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.[22]

Social Programs
The social programs that will receive priority funding from 30% of revenues include:[22]

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".
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][23] There are six (6)
main key provisions, three (3) additional excise taxes, and four (4) financial taxes.[24]

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%

₱30,000 + 25% of the excess over

Over ₱400,000-800,000 6%
₱400,000

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-employed 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.[25]

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.[23]
"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".[23] 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.[26] Listed below is the effect of the Petroleum Excise Tax (note: the
additional excise tax is per liter)[27]

Curren
Excise Tax per Liter 2018 2019 2020
t

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 ₱3.00

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.

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".[29] 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.[29]

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.[29]

Additional Excise Taxes

There are three additional excise taxes, namely coal, cosmetics and tobacco.[24]

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.[30] 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.[24]

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.[24]
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.[24]

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.[24]

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 indigenous petroleum, which will be doubled from 3% to 6%.
[31][32][33]

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.[12] 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."[6] DOF Secretary Carlos Dominguez III claimed
tax revenues grew by 18.2%, "exceeding the 9.7 percent nominal gross domestic product
(GDP) growth."[6]
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."[6]

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."[7]"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."[34]

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.[34]

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.[7]

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.[35] Notable government figures in opposition of the current law, that is
they are calling for amendments 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.[10][9] Ultimately,
President Duterte stated on June 2, 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.[35]

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.[36] This is also being pushed forward
by the Department of Finance by submitting its proposal for Package 2 of its tax reform program
to congress which aims to reduce corporate income tax rates and rationalize fiscal incentives.
[37]

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.[36]

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.[38]

Makabayan bloc
There were objections made by the Makabayan bloc, a left-wing 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.[39]

Call for suspension

Three senators called for the suspension of the implementation of 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.[40]

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.[41]

Protests
Since Duterte signed the TRAIN Law, protests were sparked since January 2018. For the
employees who worked under the minimum wage of ₱512, only ₱70 will be spend just for the
food in a day because of increasing goods.[42] Other budget issues such as house rent,
education, LPG, personal hygiene, etc. The militant groups feared that most of the Filipinos will
face hunger since the increase of excise tax in the market.[42]