LEGAZPI CITY—All but one percent of the estimated 7.5-million Filipino low wage and salary earners with annual incomes of P250,000 and below have welcomed President Rodrigo Duterte’s recent signing of the Tax Reform for Acceleration and Inclusion law, which assures they would be exempted from paying taxes.
Albay Rep. Joey Salceda, one of the bill’s principal authors in the House of Representatives, said TRAIN will help expand the country’s middle-income class sector.
The law’s leading features are its lowered personal income tax threshold and higher take-home pay the Filipino working class, Salceda said.
The Albay lawmaker said the approved TRAIN version will raise some P140 billion plus another P36 billion in income transfer for a combined P176 billion in government revenues annually.
He said it constitutes “the single biggest income and wealth structural transfer to lower income Filipinos in Philippine socioeconomic history.”
The measure, passed overwhelmingly by the House last May, will be the game changer it was meant to be, toward the country’s economic growth and globalization, said Salceda, a noted economist.
“It is envisioned to narrow the margin of inequality and injustice between the marginalized and the elite,” he said. “It amends the decades-old tax schedule for personal income, which is one of the highest within the Association of Southeast Asian Nations.”
The pro-poor feature of the bill has lent it unprecedented support from both the government and private business sectors, as well as civil society groups and non-government organizations, making it “a most understood and appreciated piece of legislation,” he noted.
After six months of deliberation on the “pro-poor” measure, the Senate-House bicameral conference committee finally ironed out its contentious provisions.
“The TRAIN measure finally came out to deliver its gains directly to the people, in the form of reduced PIT and raised [government] earnings,” Salceda said.
Certified urgent by Duterte, the original and attractive features of the House TRAIN version are its lower tax rate for fixed-income earners, and the tax exemption of the first P250,000 in annual income.
The bicameral committee also exempted from tax the 13th month pay and other bonuses up to P90,000.
As conceived in the bill, 30 percent of the revenue will go to education — primarily to fund the Universal Access to Quality Tertiary Education Act, health programs, nutrition, anti-hunger programs, social protection, social welfare and benefits program, employment and housing.
The bulk or 70 percent of the revenue will go to the ‘Build, Build, Build’ infrastructure program, military infrastructure, sports facilities for public schools, and potable drinking water in all public places, among others, Salceda said.
Under the approved TRAIN, those earning up to P400,000 will pay 20 percent of the excess over P250,000. Those earning more will pay fixed amounts plus a percentage tax on the excess of their respective income brackets.