News Release

From the Presidential Spokesperson – On the TRAIN’s effect on the poor

Contrary to the claim of IBON Foundation, the rich and the poor would both benefit from the newly enacted Tax Reform for Acceleration and Inclusion (TRAIN) Act.

TRAIN is often criticized for its perceived negative impact on the poor; mainly, implementing TRAIN will lead to higher prices. While adjusting excise taxes would raise prices of some commodities faced by consumers, we assure everyone that it will be minimal and it will be temporary. The Department of Finance, the Bangko Sentral ng Pilipinas, and the National Economic and Development Authority estimate only around 0.4-0.7 percentage point increase in inflation during the first year of implementation with the impact tapering off over time.

Rather than look at the short-term minimal price increases, we must view the persistent poverty and high inequality which results from the systemic inability of the poor to participate in society actively and productively. The poor are denied opportunities and are routinely excluded from access to adequate social services and infrastructure that boosts productivity.

The passage of the first package of the Comprehensive Tax Reform Program (CTRP) helps address this. Much more than providing higher take home pay to wage earners, TRAIN would also mean more jobs, better infrastructure, and more efficient delivery of services from massive investment in infrastructure and on people. These investments would increase the productive capacity of the economy, thereby creating more and better jobs and result in high quality education, better health services, and adequate social protection so that everyone, especially the poor, is accorded with equal economic opportunities towards prosperity.