How the TRAIN law worsened poverty, inequality
TRAIN Law or the Tax Reform for Acceleration and Inclusion was signed in 2017 to correct the drawbacks in the tax system of the Philippines. Through this law, various alterations in the different types of taxes were introduced including reform in personal income tax, estate tax, and even excise taxes on the sweetened beverages and tobacco products, etc. The government plans to use the generated funds/revenue from this reform to provide better services for its people in different aspects such as health, education, social protection, and other infrastructures. This law is supposed to promote fairness and equality in terms of opportunities given especially for the poor. They said many people will benefit, however, in reality, the underprivileged were put under the broken promises of the government. The supposed general welfare seems far from what was planned and instead of giving the poor some benefits they deserved, they continue to struggle in poverty. Although informal sectors are not included in the income tax reform and are not affected by the change still, when the country faces inflation, the said law as “counter-loss” in revenue will likely worsen poverty and income inequality. If the oil price increases, it will affect other prices of the goods as well as their production. And as the price of the goods increases, the value of money decreases, and their ability to purchase will likewise decrease. It’s like a domino effect but the one who will carry the most burdens is the people at the bottom of the income class pyramid and the poorest of the poor Filipinos who can’t even afford to buy three meals a day for their family because of the lack of income they earn daily.
On the other hand, some Filipinos in the high-income class favor the law because the amount of tax they pay is reduced by some percentage which gives them better opportunities. The tax they pay is based on the income they earned so even if they earn a lot, the amount of tax does not harm their ability to fulfill all their needs and wants and even luxury to maintain their lifestyles. The only affected are both ends of the spectrum of the society - super-rich and poorest of the poor.
It’s never been fair at the beginning of the law for both rich and poor because the inequality between them was never been abolished. There still a gap and the ones who are on top of the pyramid class continue to step up but those who are in the bottom can’t even go up and continue to sink.
The tax which is the value that comes from the hard-earned money of the Filipinos to contribute to the funds of the country must be utilized and used justly as what the government promises for its people. Their role is vital in providing social services, handling the issues of the country with competence as well as accountability in every decision and laws they are implementing where everyone will benefit not just for themselves but for the people.