Consumers

Thesis Statement: Under the TRAIN Law, consumers are faced with high priced daily commodities, due to additional excise
taxes, that offsets the benefits they get from their relatively higher income pay from the revised income tax scheme, that aims
to shift the burden off the lower income segments.
-------------------------------------------------------------------------------------------------------------------------------
 Introduction

o Increase Take Home Pay
 The TRAIN Law introduces a new way on how consumers and income earners look at tax. At first
glance, it may look good due to the increase take home pay that we receive but looking at it in a
deeper perspective, the increase is nothing but a cover for the increase in expenses which would
be further discussed later. 

 Comparison with old tax scheme for income
o Unlike the old tax scheme, income earners are obliged to give to the
government a part of their pay as long as they fall under that regulations of
the chart. For example, if you earn P10,000 and below, instantly you’ll be
taxed 5%. Unlike now, P250,000 and below income earners are not taxed.
-------------------------------------------------------------------------------------------------------------------------------
o Increase on Basic Commodity Prices

 Counter measure for Inflation
 As mentioned the increase in take home pay is just a way to cover up the real deal
regarding this issue, which is the increase on basic commodity prices on several
household items that are vital to us. I’m not only talking about surface level products,
such as tangible goods such as laundry detergents and edible products. 

-------------------------------------------------------------------------------------------------------------------------------
o Consumer Behavior regarding prices

 With the high rise of prices for basic commodities, Filipinos are quick to react with the situation.
As stated by Mr. Go, the shift of focus on the more essential items was evident. The decline on the
interest on sweetened beverages also declined due to the increase in prices for sweetened
beverage. Knowing filipinos, this is surprising because as a country, we consume an average of 2.4
million sweetened goods per month. One can say that filipinos really cant live without sweets
after and even during meals. Another evident curve in the consumer behavior would be on the
spending for automobiles. Now this is not limited to buying automobiles but also the maintenance
of it. Since there is a price increase on oil prices, most people opt to reserve this precious
commodity for special occasions.
o More or less, filipinos are not taking this sudden shift in our tax structure very lightly. Everyone is one edge
because now it’s harder to budget even if the pay is higher.
-------------------------------------------------------------------------------------------------------------------------------
 Body

o Effects on Consumers

 Excise tax on Unhealthy Foods and Vices

 Additional tax on sweetened beverages
o The additional tax on sweetened beverage hopes to aim more health
awareness towards our consumption with sugar. But digging deeper into it,
the tax applies per volume and not on the sugar content itself. This means
that basically they are taxing water. I like Dr. Aranza’s analysis on this one
because it’s questionable why is it curtailing one of our basic needs?
 Additional tax on vices 

o In terms of taxes on vices, there is a significant increase on the prices of
cigarettes and alcoholic beverages to discourage filipinos from smoking and
drinking. According to Rappler, the Philippines was listed on the Top 20
smoking and alcohol consuming countries in the world. Consumers are quick
to react on the issue at hand. Some expressed their concerns on how hard it is
to stop consuming these vices given that it would be harder to purchase.
-------------------------------------------------------------------------------------------------------------------------------
 Other counter-effects of TRAIN Law 

 Additional tax for cars and fuels 

o Among the tax components, this part affects the daily commute life of
filipinos. Numerous drivers od PUVs are affected by the increase on prices for
fuel. The metro manila traffic does not help their cause because they tend to
spend more now since they spend more time on the road while their engines
are running.
 Additional tax for energy 

o The last thing I want to point out with the new tax scheme would be, why
would there be additional tax on energy consumption. With the addition of
this on TRAIN2, additional burden will be placed on the shoulders of our
brothers. Moreover, it is another thing to consider when they budget their
spendings per month.
-------------------------------------------------------------------------------------------------------------------------------
o Effects on the Informal Economy 

o "Dati P5 per stick lang 'yung Marlboro. Ngayon binebenta ko na ng P7 isa. Dahil mas mahal na 'yung pakete,
binawasan ko na lang 'yung pagbili ko ng supplies. Ang taas nang itinaas. Paano naman kaming walang
suweldo at pagbebenta ang kabuhayan?"
 Adjustment of side street vendors 

 According to the PSA, over 15.6 million workers in the informal sector will suffer from
the train law. Unlike the average income earners of big corporations, these people don’t
get additional income from the law because they buy and sell goods. These people are
the self-employed, independent, and distributor of different goods and services. They
are the vendors you usually see on side streets as you stroll along our city. Even if the
TRAIN law offers a huge benefit for income taxes, this cannot be applied to them
because they are not covered by labor laws and they have no social protection.
 Effect on buying and selling goods 

 With this problem, they are forced to increase the prices of the items they are selling so
that in some way they can still get money out of their business. According to the PSA,
with the increase in prices for the materials and goods, these informal settlers are
forced to increase their prices by 75%. So your 4 pesos fishball will now be worth 7
pesos.
-------------------------------------------------------------------------------------------------------------------------------
o Government Actions

 Cash transfers of DSWD to Filipino Households

 Compensation acquired by households

o “DSWD will identify beneficiaries based on the [list] – the Pantawid Pamilyang
Pilipino Program and the social pension beneficiaries. The budget for the
unconditional cash transfer is included in the 2018 budget, totaling P25.7
billion," -Carlos Dominguez, DSWD Representative
o With all the complaints and the outburst of the community, the government
decided to step in by assuring everyone that this TRAIN law has a reason and
all they need was patience and understanding. The main problem with this
would be that it is an inconsiderate statement given that these officials are
not experiencing the same thing that majority of our population is
experiencing now. Given all of this, according to DSWD, they are doing their
best to help out those who are really affected by it. So this means that there
would be additional monetary compensation for these families. Each
household will receive P2,400 per year.
 Actual effect of the Government Actions

o However, this resolve is nothing but a band aid solution on what needs to be
solved. This is a way of protection for the actual impact or gravity of the whole
effect. It is not enough to compensate and to sustain the daily lives of these
households.
-------------------------------------------------------------------------------------------------------------------------------
 Conclusion

o Different Perspectives for Consumers to look at taxes

o TRAIN Law as an “Anti-Poor” Law

o Beneficial only for the middle and upper income segments

-------------------------------------------------------------------------------------------------------------------------------
I agree with the stand of our beloved PEZA consultant. Yes, the TRAIN law introduces a different perspective for us, the
consumers, on how these taxes affect our lives. Moreover, the essence of the TRAIN law now makes it more like an “Anti-Poor”
law. I really hope that there could be some considerations regarding the construction of this where not only the middle and
upper income segments would benefit. I hope that it can be looked at as a way on how we can rise as a nation, not only on
funding for our infrastructures but also our daily lives as filipinos.