The inconvenient truth about TRAIN

TBy HE stories of rising prices and escalating costs of living and of doing business are bound to mount as the Duterte administration continues to implement the TRAIN Law.

Still to come, courtesy of Dutertax and the unchanged economic policies favorable to a few:

• Tuition fee increases in private colleges and universities ranging from five to 15 percent.

• Another round of fare hikes for the privatized LRT-Line 1 fares ranging from R5 to R7 by August

• Water rates in Metro Manila could also go up by as much as P12.69 per cubic meter

Economists at Ibon Foundation have been busy. They’re taking a look at the devastating impact of TRAIN, and have been checking both official data sources, on-ground price updates in palengkes, and reports from consumer and mass organizations.

TRAIN has caused runaway price increases across the board nationwide. That businesses of all sizes are complaining — including those with pockets deeper than those who own sari-sari stores — should be an omen of the worse situation faced by poor and middle class families. No avalanche of claims from Roque, Dominguez, and even Duterte can hide this economic mess they put people in.

I don’t intend to list down here the adverse effects of TRAIN on the poor and the middle class. Trade unions, peasant associations, urban poor groups, and professional organizations can and intend to do that in defense of their livelihoods.

But I intend to put here the flip side that’s not mentioned by Roque, Dominguez and Duterte: That TRAIN actually further enriches a few (the oligarchs) by sneaking all sorts of tax cuts favoring these few powerful interests nationwide.

We are made to shoulder new and higher taxes because it sneaked income tax cuts for the wealthiest — they who don’t need economic relief and who in fact should be made to bear a heavier tax burden.

“It does not make sense for supposed tax reforms to give a corporate executive already earning R303,059 monthly (or R3.7 million yearly) an additional R1,212. Nor does it make sense to only tax a company’s chief executive officer earning R706,017 monthly (or R8.5 million yearly) just an additional R20,694; this is probably just what would be spent on a weekend family dinner,” according to Ibon.

This makes perfect sense only under a system that unduly favors the rich at the expense of the poor, a system which TRAIN does not challenge but perpetuates.

Ibon further illustrates the problem:

“Despite (government) claims that the poor benefit most from (TRAIN), the truth is that the poorest majority of Filipinos bear a heavier tax burden than the rich.

“The poorest 60 million Filipinos will pay R47 billion in additional taxes, or 2.3 percent of their combined family income of some R2 trillion. Meanwhile, the highest-income 40 percent will pay R47.6 billion, or only 0.8 percent of their total family income of some R4.1 trillion.

“This means the highest income 40% who have twice as much income as the poorest 60% of Filipinos will be paying virtually the same amount in additional taxes. Measured as a share of their total income, the poorest 60% will pay three times as much as the highest income 40% including the richest Filipinos.”

Under TRAIN, the government admits that it will lose R3.1 billion per year because of lower estate and donor taxes. That’s an immoral R3.1 billion more in the pockets of oligarchs and the wealthiest — immoral because they don’t need economic relief, and this revenue loss is passed on to consumers through new and higher consumption taxes.

Lower and middle-level professionals who initially welcomed and celebrated the cuts in personal income taxes are now taking a second look. They correctly insist that they deserve lower personal income tax rates. Nothing justifies a 32 percent tax rate on the middle class. They are now beginning to see the swindle, which Makabayan has long deplored: The swindle is in how TRAIN mixed and bundled personal income tax cuts for the middle class, sneaked tax cuts for the wealthiest, and imposed new and higher taxes on everyone.

Yes, folks. As correctly pointed out by a recent Manila Bulletin editorial, the government must review the adverse effects of Dutertax on the majority of the public. But we must add two other legitimate reasons for such a review: (1) The tax hikes levied on the poor perversely pay for tax cuts for the wealthiest; (2) How to protect and the reductions in personal income tax rates for the middle class.

The situation is bound to get even worse and at the same time present a clearer picture of how pro-oligarchy this tax is. Under the TRAIN Law Part 2 or Dutertax 2, the administration intends to bestow reductions in corporate income taxes across the board, even for the most profitable — again at everyone else’s expense.

That’s the inconvenient truth about TRAIN. That it is not only antipoor. It is undeniably pro-rich.