Wednesday, December 13, 2017
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Get Real

Put the TRAIN back on track

The TRAIN (Tax Reform for Acceleration and Inclusion) is being derailed, and I cannot understand why Malacañang called in the senators last Wednesday, apparently to urge them to pass the derailed version. My information is that 16 of them responded.

Again, why derailed? Well, what do you call a bill that originally was supposed to bring in P147 billion, but is now, thanks to the House of Representatives and the Senate, down to less than P60 billion, or 40 percent of the original? How did that happen? Well, the House version brought it down to P119 billion, and the Senate version, although not yet final, has reduced that further to P60 billion.

What’s more, the way things are going—the Senate has been discussing the bill in plenary in the past two days—the final version may bring that further down by P24 billion! How? By the senators deciding to retain the zero-rating of VAT enjoyed by Peza (Philippine Economic Zone Authority)-registered enterprises, and then also including special ecozones and free port zones (this was Sen. Sonny Angara’s contribution; remember, he has one of those in Aurora—Apeco) in the deal. And since they were on a roll, Sen. Dick Gordon asked for, and was granted, the inclusion of tourism economic zones also. That’s how. Don’t you think, Reader, that Angara, having a conflict of interest here, should at least have recused himself from this conversation?

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Of course, there seemed to be assurances all around that this loss would be compensated for by such things as removing exemptions from documentary stamp taxes and even more cockamamie—making corporate income taxes progressive. Both proposals have had no CSW (complete staff work), no studies. Yet, Angara agreed to include these in their discussions. For sure, they cannot be counted on.

Well, how does this P60 billion compare with the new additional spending proposed and approved in Congress? Jo-Ann Diosana of AER (Action for Economic Reforms) submits this compilation: PUV modernization (Year 1) of P9.7 billion; free college tuition, P40 billion; unconditional cash transfers (for those who are hurt by TRAIN), P36 billion; Universal Health Care law, P65 billion; and the rebuilding of Marawi City and others, P60 billion. For a grand total of P200.7 billion.

Just compare, Reader: P200.7 billion required for President Duterte’s programs, with P60 billion (and dropping) raised by the TRAIN. If this is the case, the government deficit next year will balloon, credibility issues will come up, the ratings from those international credit agencies will deteriorate, and it will be more costly to borrow. The entire Philippine Development Program may be jeopardized. A vicious downward spiral?

Is this really what President Duterte wants? And is it because somebody is feeding him fake news? Or, alternatively, are these senators just hoping to pass the bill and then leave it up to the bicameral committee to change things back to the old order? This must be a very attractive proposition because the senators get all the popularity and voter approval for keeping taxes down, yet the President gets what he wants in terms of revenues. Plus plenty of room for bribes.

With all these new and untried revenue-raising propositions being considered by Angara, one cannot understand why an old and tried proposition, like raising tobacco taxes, does not get his support.

What will raising tobacco taxes in this TRAIN do? Let me count the ways: It will raise revenues in 2018 by P50 billion, which will assure, at least, that the Universal Health Care law will be carried out properly, and medical care will improve. The increased tobacco prices will also prevent 200,000 nonsmokers in 2018 from picking up the habit. Which means that down the road, the 46 tobacco-related diseases will have less incidence.

In any case, the youth have told the Senate in no uncertain terms that they want the tobacco taxes to be increased, now. The medical community is also in support, as is civil society. Come on, Senator Angara. What’s holding you back? Time to put the TRAIN back on track. Time to do something for the country.

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TAGS: House of Representatives, Senate, TRAIN (Tax Reform for Acceleration and Inclusion), VAT
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