Fernandez,

The bad news is we will expect another spiral in fares, and other products and services dependent upon transport such as vegetables and farm products. This aspect of the law, because wage- earners earning below P20,000 a month have no additional tax benefit anyway, has penalized them indirectly by the increase in fares and for the ubiquitous motorcycle commuters a big dent in the wallet. For the larger mass of low- salaried workers, the effect has been punishing as they have less disposable income after the effects of cost- push inflation.

Automobiles and SUVs will now be taxed at higher rates. Vehicles costing P600,000 and below will be taxed at 4%, above P600,000 up to P1 million — 10%, above P1 million to P4 million — 20%, and above P4 million — 50%. Hybrid cars are taxed at half the rate of diesel and gasoline vehicles while pickup trucks and electric vehicles are exempt.

Of interest is that cosmetic surgical procedures will now be taxed at 5%, when performed for purely aesthetic purposes. Power rates may also go up as an excise tax on coal has been imposed at P50 rising to P150 by 2020. We have some coalfired baseload plants in our power grid.

All told, there will be without doubt an increase in prices brought about by cost- push factors directly and indirectly related to the TRAIN law. For some this may be more than offset by higher take- home pay, but for those earning below P20,000/ month, the effects after inf lation will be painful. An important facet of the implementation is that a way must be found to cushion the effect on the low- salaried workers who are bearing the brunt of effects. The failure to address the plight of the low salaried workers may result in civil unrest.

However, if government can use the increased revenues to accomplish its BUILD program and other services, then the increased taxes will have been worth it.