TRAIN LAW

TRAIN LAW

Taxes are the lifeblood of the nation. Without it, the government will be paralyzed for lack of motive power to run its affairs. However, taxation must be equitable (i.e., that burden of tax should fall on those better able to pay).

TRAIN was crafted to raise more tax revenues. However, while it increases the burden of tax that falls on the ordinary people, it lessens the load of those better able to pay.

TRAIN is significantly unfavorable to the Filipino people with greater impact on those earning below the minimum wage, while extremely favorable to oligarchs. The same will not entirely boost tax revenues in spite of the increases in excise tax and tax rates imposable on sale of shares of stock traded and not traded in the local stock exchange as it can be offset by the extreme drop in transfer taxation.

On 19 December 2017, PRRD signed into law RA No. 10963 otherwise known as the TRAIN that took effect on 01 Jan 2018. The Act amended several provisions of RA No. 8424 otherwise known as the 1997 NIRC, as amended, which include, among other things, the following:

#️⃣1: Increase in percentage tax rate on sale of shares of stock listed/traded in the local stock exchange from one-half of one percent (½ of 1%) to six-tenths of one percent (6/10 of 1%).

Commentaries:

The increase is slightly favorable to the government. It will increase tax revenue by approximately 20% in this particular tax classification. This is not burdensome to ordinary people because only those moneyed ones may invest or engage in this particular taxable activity.

#️⃣2: Increase in CGT rate imposable upon the gain on sale of shares of stock not traded in the local stock exchange from 5% on the first P100K and 10% on the amount in excess of P100K to a flat rate of 15%, of such gain; and increase in Documentary Stamp Tax (DST).

Commentaries:

The increase in CGT and DST rates imposable on sale or other disposition of shares of stock not traded in the local stock exchange will certainly increase tax revenue even if this is a non-recurring transaction.

But considering that this transaction is subject to Donor’s Tax on deemed gift in the event the FMV of such shares is higher than the selling price, the donor's tax rate fixed at 6% under TRAIN will yield a significantly lower amount of tax.

Though this is not burdensome to the ordinary people considering that only those moneyed ones may invest or engage in this taxable transaction, the decrease in Donor’s Tax rate from 30%, if donee is not related to the donor, to only 6% is extremely unfavorable to the government while significantly favorable to oligarchs.

#️⃣3: Increase in the threshold of non-taxable (exempt) income to P250K of individuals with modifications of rates of tax and  graduation of income within each rate bracket.

Commentaries:

The increase in the threshold of non-taxable (or exempt) income for individuals and the modifications of the rates of tax and graduation of income within each rate bracket, are beneficial to all individuals earning more than the P250K exempt threshold.

While this may slightly result in income tax drop, it would not materially diminish government revenue as the same can be offset by the following increases in -

■ one: the percentage tax rate on sale of shares of stock listed/traded in the local stock exchange as discussed in #1 above;

■ two: the CGT and DST rates on sale of shares of stock not traded in the local stock exchange as discussed in  #2 above; and

■ three: the significant unitary increase in excise tax which is discussed in #4 below.

#️⃣4: Significant unitary increase in excise tax.

Commentaries:

The significant unitary increase in excise tax will certainly generate more tax revenue in this particular tax classification. However, it will result, and which has in fact already resulted, in the meteoric rise in prices of goods and services.

Such substantial increase doubly raised the burden of tax that falls on the final consumers with greater impact on the ordinary people, because the increase in excise tax consequently increases the amount of VAT considering that excise tax forms part of the gross selling price upon which the VAT is based.

And though such increase will result in higher revenue in excise tax, it will not raise VAT collection given that our VAT system adopts the tax credit method wherein the Input VAT is creditable against the Output VAT (i.e., Output VAT minus Input VAT).

#️⃣5: Substantial changes in transfer taxation (estate and donor's taxation).

❇️ Estate taxation

The flat rate of six percent (6%) with the corresponding exorbitant increase in the value of the "family home" from P1M to P10M and increase in the amount of "standard deduction" from P1M to P5M, to be deducted from the decedent's gross estate will definitely yield a significantly lower amount of tax or even zero collections in some regions considering that the values of properties located in those areas may not be at par with those that are located in a more progressive and developed cities like in metro manila. - Extremely unfavorable to the government, while significantly favorable to oligarchs.

❇️ Donor's taxation

The significant changes in donor's taxation provided under TRAIN as compared to the previous statute, appear to be inequitable considering that donation of property with lower fair market value produces a significantly higher amount of tax, while donation of property with higher fair market value yields an extremely lower amount of tax. - Unfavorable to both ordinary people and government, while extremely favorable to oligarchs.
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🇵🇭On another note.

BIR's 2019 Collection, Window-Dressed to Trick President Duterte.

The Bureau of Internal Revenue missed 2019 revenue goal. The P2.17-T tax collection for the period is approximately 7% short of its P2.330-T target despite TRAIN Law and Tax Amnesty Programs: and even as it includes advance payments or remittances from friendly large taxpayers thru the manipulation of the Bureau’s Large Taxpayers Service, which is a "modus operandi" whenever tax collections fell short of the expected target - to window-dress the agency’s collection efficiency purposely to trick President Duterte.

Just like in June 2019 when PRRD asked the BIR of its collection, it tricked the President by reporting unverified information - that the BIR allegedly collected P317-B tax revenues for the month of May 2019. How can the amount be accurately verified when the agency’s ITS during that period has bogged down? The Bureau's Revenue Data Centers (RDCs) in Visayas and Mindanao were then malfunctioning.

If TRAIN LAW was not a failure, then why did the BIR have to WINDOW-DRESS its 2019 Collection?

Window Dressing is CHEATING.

And if TRAIN LAW was indeed not a failure, then why did DOF Secretary Dominguez defy the SUPREME COURT Final Decision (G.R. No. 199802 and G.R. No. 208488 decided 2018-07-03 final since 2019-04-10) ordering the Department of Finance to pay all Local Government Units (LGUs) Internal Revenue Allotment or IRA amounting to P600 billion? 

P600 billion is such a gargantuan amount of funds for use in the development of the LGUs. The same could have already been used more importantly now that our country is experiencing an extremely dangerous catastrophe triggered by the ongoing outbreak of the coronavirus (COVID-19) disease.

Is it not that the secretary was the principal architect of the TRAIN Law?

Is it not that the TRAIN Law was purposely crafted to raise more tax revenues for the government?

Where is it now considering that the said law has been in effect since January 1, 2018 yet?

Is it not that the BIR was so proud in announcing that it was able to collect P2.17 trillion for year 2019 even if approximately 7% short of its P2.330 trillion expected revenue for the year, not to mention that it was actually WINDOW-DRESSED to trick the President? Nasaan ito?

Estimated share per LGU from the P600-B
(Partial Listings):

❇️For City Governments
(Brgy shares not yet included):

Quezon City P5.316-B
Davao City P5.196-B
Manila P3.263-B
Zamboanga City P2.967-B
Caloocan City P2.944-B
Puerto Princesa City P2.826-B
Cebu City P2.071-B
Antipolo City P1.817-B
Cagayan de Oro City P1.746-B
General Santos City P1.682-B

❇️For Provincial Governments
(excluding Brgy shares):

Cebu P4.625-B
Negros Occidental P3.673-B
Cavite P3.475-B
Pangasinan P3.324-B
Bulacan P3.303-B
Palawan P3.111-B
Quezon P3.058-B
Laguna P3.008-B
Isabela P3.001-B
Batangas P2.870-B

❇️For Municipal Governments
(excluding Brgy shares)

Rodriguez  Rizal P0.692-B
Cainta Rizal PO.590-B
Taytay Rizal P0.584-B
Sablayan Occ Mindoro P0.544-B
Binangonan Rizal P0.527-B
Silang Cavite P0.492-B
Santa Maria Bulacan P0.486-B
San Mateo Rizal P0.474-B
Tanza Cavite P0.436-B
Marilao Bulacan P0.418-B

Nasaan ang PAGBABAGO, mr. secretary?
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🇵🇭On a different note.

President Duterte’s deafening silence on BIR Dulay corruption crushed the credibility of his anti-corruption mantra.

It's been two (2) years now since the President was officially informed of the corruption issue involving BIR commissioner Caesar Rivera Dulay thru the former BIR Director Othello Dalanon’s letter-report, but the President remains mum about it.

The BIR DULAY CORRUPTION has also been publicly exposed via -

✅Social media or Facebook postings;
✅Publication in MSM:
▪️The Manila Times by Mr Ramon T. Tulfo
▪️GMA News Online by Mr. Flor Taguinod
✅Mass actions held by RDRG at -
▪️BIR National Office in Quezon City
▪️Philippine Senate in Pasay City
▪️National Press Club in Manila
▪️Mendiola (Front of Malacanang Gate)

With all these discourses, it is believed to be infeasible that the President still doesn't know about the issue.

His deafening silence on Dulay's case clearly demonstrates tolerance despite the severity of the criminal offense that Dulay has committed against the Republic of the Philippines - in the extremely anomalous settlement of Cosmos Bottling Corporation's (Cosmos) P3.76 billion deficiency tax liabilities for only P51 million.

The Cosmos case already has a Final Decision from the Court of Tax Appeals (CTA Case No. 9405 dated 25May17). The Court said that Cosmos’s P3.76B deficiency tax liabilities has become final, executory and demandable; BIR’s settlement for only P51M was INVALID and without the approval of the Bureau’s Evaluation Board.

On 13 February 2018, Dalanon reported this anomaly to the President thru the then SAP, now senator Bong Go.

On 08 February 2019, Dalanon again submitted a report to the President reiterating the aforementioned anomaly and that of the Del Monte's P8.7B tax liabilities which was also grossly reduced to only P65M.

Sadly, on 25 June 2019, Dalanon was dismissed from BIR for reporting the worst corruption ever in BIR history involving President Duterte’s long-time friend and former YMCA Dormitory room mate BIR commissioner Caesar Rivera Dulay.

Who else can have the audacity to report corruption in government if it would only mean dismissal from the service just like what happened to former BIR Director Othello Dalanon who was sacked for reporting BIR DULAY CORRUPTION to President Duterte and senator Bong Go?

Othello Dalanon
Former BIR Director

#Justice4OthelloDalanon
#PresidentRodrigoRoaDuterte
#EmptyRhetorics
#AntiCorruptionCrusader
#Expositors
#Whistleblowers
#Dutertax
@Bong Go
@Jocellyn Duterte Villarica
#DU30GOBELGICA
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@Greco Belgica
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