Practicability - Affirmative: Let It Be Resolved That: TRAIN Law Be Suspended

Practicability – Affirmative
Let it be resolved that: TRAIN Law be suspended
Judges, Mr. Moderator, esteemed speakers from the negative side, distinguished
colleagues from the affirmative side. Once again, the plan to suspend Train Law resonates
from the walls of our august congress. What will be decided will certainly serve as a vital
measure for generations to come. Ladies and gentlemen, we are eyeball to eyeball with
history.
As the 3rd speaker of the affirmative side, my principal function in today’s august
academic discourse is to prove that the suspension of the Train Law is not disadvantageous
but rather strongly practicable.
First, Train Law is extremely disadvantageous to the poor.
The impact of Train law among poor Filipinos could never be denied. While the TRAIN law
provides higher income tax exemption for those earning below 250,0000 annually, it
actually levies higher tax burden to the poor majority with the removal of some VAT
exemptions and introduction of new excise taxes on petroleum products and sugar-
sweetened beverages.
The rich and other higher income groups will have larger take home pay than previously
estimated under the new tax law, while the poor will still bear the brunt of paying higher
taxes. The highest earning 40% or about 9.1 million households will have even more
money in their pockets under the recently passed Tax Reform for Acceleration and
Inclusion (TRAIN) Law compared to the original Department of Finance proposal.
Using July 2017 data from the DOF on the first year impact of TRAIN, IBON previously
estimated that the richest 10% earning an average of Php115,428 monthly will have an
additional Php33,795 annually. But IBON’s computations based on the latest December
2017 DOF data shows that the richest 10%, now estimated by the DOF to be earning an
average of Php104,170 monthly, will have an additional Php90,793 annually.
Meanwhile, the poorest 60% of Filipino households or 13.7 million households will
continue to have less money under the new tax law, though figures based on the more
recent data are slightly lower than previously estimated. Under TRAIN in 2018, every rice
farmer (first and lowest income decile) will lose Php646 annually; every farm worker
(second income decile) will lose Php937; every construction worker (third income decile)
will lose Php1,141; every private school teacher (fourth income decile) will lose Php1,363;
every bookkeeper (fifth income decile) will lose Php1,591; and Php1,887 will be taken
from every machine tool operator (sixth income decile).
Some 15.2 million families who earn minimum wages or below belong to the informal
sector who are already exempted from paying income taxes will not benefit from income
tax cuts. But these poor families are actually shouldering the higher cost of goods and
services as a result of the Train Law.
Second, The Philippines is not feasible in carrying out the TRAIN Law. There are two
international factors that could explain it:
First, Surge in oil prices. World oil demand has strengthened while world oil supply has
weakened, thus the comeback of high oil prices.
On the other hand, world oil demand is higher because economic growth worldwide is
brisk.
Second, Weaker Peso. In the Philippines, higher world oil prices have been particularly
painful because of the weaker peso and Train. According to the data as of May 2018, the
peso-dollar exchange rate is at a 12-year low, hovering around P52.3 per dollar in May. A
weaker peso is not necessarily bad. But it certainly makes imported commodities, including
oil costlier. In other word, the weaker peso amplifies the impact of higher world oil price.
Although a weaker peso is good for the country’s dollar-earning sectors, higher inflation
could easily counteract the purchasing power of the extra earning.
To end this speech, let by quoting what Ronal Reagan said “Inflation is as violent as a
mugger, as frightening as an armed robber and as deadly as a hit man.” Inflation is
undeniable. But what can government do to cushion the impact of higher inflation? The
answer clearly goes with the suspension of Train Law which is clearly a panacea to the ills
that hound our country.

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Practicability – Affirmative

Let it be resolved that: TRAIN Law be suspended

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