Settled TRAIN

Social media have been chirping on the railroading of TRAIN, examples are the tweets of Center for Media Freedom and Responsibility (CMFR) and investigative journalist, Ms. Raissa Robles. CMFR tweeted, “Without a quorum: TRAIN railroaded into Law,” while Ms. Robles said: “Govt is doing public consultations AFTER, not BEFORE, new tax laws were passed. This is not supposed to be how democracy works.”

A lot can be said about this administration and the legislative process; but with regard to the Tax Reform for Acceleration and Inclusion (TRAIN) law or Republic Act No. 10963, let me state, and I was a direct participant in advocating TRAIN, that it was not railroaded.

Congress invested time and resources, deliberating more than 62 occasions running several hours each — that’s at least one public consultation every two weeks for the past 16 months since the Department of Finance (DoF) presented its proposal in September 2016. Almost all hearings and meetings were public — 20 sessions were held including four plenary sessions at the House, 36 sessions at the Senate, 12 of which were plenary sessions. Only the six bicameral committee hearings and about seven technical working group meetings were closed door.

The first package of TRAIN originally had five key components: the adjustment of personal income tax, rationalizaton of VAT exemptions, adjustment of excise taxes on fuel and automobile, and the earmarking for targeted cash transfers.

By the time TRAIN left the House of Representatives in May 2017, the components grew from five to 11 with the inclusion of the flat rate on estate and donor’s tax, the introduction of the excise tax on sugar sweetened beverages, and three tax administration measures — the relaxation of the bank secrecy law and exchange of information, interconnectivity, and electronic receipts, and fuel marking.

The Senate expanded TRAIN even further when it released its version with 10 more provisions: the increase in coal tax, with the removal of the exemption on local coal, doubling of mining and most of documentary stamp taxes, increase on the tax on foreign currency deposits unit (FCDU), capital gains tax for non-traded stocks, stock transaction tax for traded stocks, adjustment of creditable withholding tax rate, the introduction of an excise tax on cosmetic procedures, additional VAT exemptions on prescription drugs, condominium, and association dues, among others, and VAT zero-rating of all sales and transactions in special economic zones, free port zones, and tourism economic zones, and some more tax administration measures. The bicameral conference committee meetings in December 2017 added one final touch — the inclusion of tobacco tax, which both chambers ratified in separate sessions on Dec. 13, 2017.

More than a year after the original DoF proposal was presented, after passing through the legislative process, the President signed into law, a measure that grew from the original five components to more than 20.

The consultations that took place in the course of 16 months shaped the TRAIN we have today.

Various stakeholders like civil society, health professionals, labor unions, environmentalists, the elderly, women and children’s rights’ advocates, business, academe, former finance, health, and energy officials, among others participated in the hearings and consultations.

Outside the halls of Congress more than 100 consultations were likewise organized by DoF, the Philippine Chamber of Commerce and Industry, and civil society organizations such as Child Rights Coalition Asia, Alternative Budget Initiative, and Action for