‘Trabaho’ will reduce your taxes | Inquirer Opinion
Like It Is

‘Trabaho’ will reduce your taxes

/ 05:20 AM August 16, 2018

There’s been much talk in recent months about fake news. And the one who’s been the greatest accuser of it has, ironically, been the greatest exemplar of it: Donald Trump, that “stable genius” (he said so himself) in the White House.

But let me become more parochial, and talk of the Philippines. “TRAIN 1 is the cause of the terrible inflation we’re suffering today,” or words to that effect, is something that many are saying. By doing so, they threaten a courageous attempt by the Duterte administration — led, in this instance, by the highly competent pair of Finance Secretary Carlos Dominguez and Undersecretary Karl Chua — to put together a package of tax reforms that would bring our tax system into the modern world.


They want a system that is simpler, fairer, kinder to those with less. But, instead of praising and supporting them, they are being lambasted for causing almost unimaginable suffering, particularly among the working class and the poor.

It’s fake news.


The problem of TRAIN 1 is not what’s in it, it’s when it was done. It coincided (unexpectedly) with a rise in world oil prices and a shortage (deliberate, some say) of rice. Oil has increased by more than 60 percent, rice by nearly 20 percent, and both have a big impact on those with less money. There are shortages, too, in other basic goods, such as sugar, corn and vegetables; poor weather has affected  other food crops. The increases in food prices weren’t due to TRAIN 1, except marginally. They were due to heartless traders mulcting hapless consumers. Hit them.

It’s heartening that two leaders in Congress, Senate President Vicente Sotto III and Speaker Gloria Macapagal Arroyo, understand what these reforms are all about and support them.

Dick Du-Baladad wrote a very good commentary piece in this newspaper explaining the TRAIN  and how it needs to be treated as a full package, not one at a time. I’m going to steal from much of what she said: “As envisioned, the TRAIN is a comprehensive tax reform program consisting of several packages — all packages being a necessary part and parcel of the whole plan, each package complementing and connected with the others — to achieve a fair, simple and efficient tax system… with the main objective of fixing a faulty, unfair, complicated and antiquated tax system.”

That says it all. Like many countries around the world, the Philippine system has grown over the decades into a complex, unfair (to the poorer of us, particularly) system well overdue for simplifying, modernizing and equalizing. The Duterte administration has had the courage to do it. It should be supported, not denigrated.

What’s in a name? TRAIN or “Trabaho” — it’s the same banana, a banana that is fresh and welcome. But Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) does say it better.

I have to wonder if the people objecting to TRAIN 2 and the following 3, 4 and 5 have actually studied them. Unlike TRAIN 1, and except for 5, all these other packages add no costs to the public; they, in fact, reduce them.

You’d be able to keep your family home if the legal owner dies, either with no tax due if its value is under P10 million, or only 6 percent, instead of the horrific 20 percent it is now. If you own a company, you’ll give only 25 percent, and eventually 20 percent, of your hard-earned earnings to government, instead of the confiscatory 30 percent you pay now. Companies will have more money to put back into growing their business, or reducing the prices of their products (well, I can hope, can’t I? Competition might force it). That would reduce inflation.


TRAIN 3 will lower the rate of transaction taxes on land and centralize and rationalize valuation of properties. TRAIN 4 will reduce tax on capital and financial transactions, but increase the tax when you sell shares.

The only people who have reason to complain are those who will see the lower taxes they now pay shortened in the time they get them. Or those others, also few, who will pay more due to some amendments. Maybe this portion on incentives needs to be adjusted, as we don’t want to lose those companies, but not lose monies unnecessarily. It’s a tough balance, but one that can be made. The ideal is to satisfy both groups.

Let’s bring our tax system into the modern world. I ask Congress to pass the four bills.

E-mail: [email protected]

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TAGS: Carlos Dominguez III, Gloria Macapagal Arroyo, Karl Chua, Like It Is, Peter Wallace, tax reforms, train, Vicente Sotto III
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