Things to welcome--and worry--about TRAIN

When the new tax rates are implemented, pump prices of gasoline and diesel are certain to shoot up

You want a brand-new car? Buy now. It’s going to cost you more next year when the Tax Reform for Acceleration and Inclusion (TRAIN) law shall have taken effect. The TRAIN still has to be forwarded to Malacañang but President Duterte’s signature will be all but a formality considering that he has been pushing Congress to pass the tax reform legislation.

The new tax rate on cars starts at 4 percent of the cost of those that sell for not more than P600 thousand. The highest is 50 percent for those that cost over P4 million. I think the tax rates are fair enough. If you can afford the top-of-the-line edition of say, the Mercedes Benz, what is P2 million or P3 million more to you?

Admittedly, I am saying that because I can only dream of owning a high-end vehicle and therefore the increased rates will not affect me, at least not directly. Besides, I believe that taxing the rich more (than we tax the poor) will help promote an egalitarian society. To my rich friends who are unwilling to shoulder the additional tax burden, try the route that we, the less fortunate ones, have always taken when we wanted to own a car: buy previously-loved (the politically correct term for used) ones.

Another reason I have for being happy about the TRAIN is the increase in the excise tax on tobacco. The rate will be P32.50 per pack during the first half of 2018, P35 in the second half up to the end of 2019, P37.50 in the next two years, P40 in the succeeding two years after which the rates grow by 4 percent every year. As a long-suffering victim of indirect smoking, I looked forward to the day when the price of cigarette has become so prohibitive that smokers will have no choice but to kick the habit. Wow!

And, of course, there is the income tax exemption. Starting next year, annual income below P250,000 will not be taxed. Those who are earning more will be taxed only for the amount in excess of P250,000. What a relief this will be not only for the wage earners but also for those who practice their profession except those who are doing really well.

But the government has to recover its losses from the expansion of the income tax exemption; thus, the increase in excise taxes. I have no problem with the higher rates on cars and tobacco as previously stated. It is the tax on gasoline and other petroleum products that worries me.

The oil companies will without doubt pass on the tax burden to their customers who will most certainly also pass it on to their own customers. Since we are heavily dependent on oil, the domino effect will be strongly felt. Forget the industries, let’s just talk about transportation.

When the new tax rates are implemented, pump prices of gasoline and diesel are certain to shoot up. And we all know what inevitably follows a gas price hike. Jeepney and other public utility vehicle operators will increase their fares and the prices of basic commodities will rise.

I hope our senators and our congressmen have done their math and have made sure that whatever savings our people gained from the expanded income tax exemptions will not be wiped out by the increase in the cost of living brought about by the tax increases. Otherwise, they’re just deceiving the public.

I also hope that our jeepney drivers will react to the expected gas price increase with reason and not resort to the measure that have made them unpopular with the public: a transport strike. They’re already restive because of the announced jeepney phaseout but it will be a big mistake if they abandon their routes and go to the streets for they will not get any sympathy from the public whose support they desperately need but who they will be unduly punishing for something that the government did.