In thearticle “Economic expert warns Train can deliver negative effects to economy”(2018 Jan. 06, Inquirer), J.Ballaran reports on the criticisms by economic expert Sonny Africa about thegovernment’s understatement of the effects of the newly passed bill. Africamentions two main points as his basis for his criticisms against thisstatement.
First,there will be an effect in terms of taxes and the inflation rate. Under TRAIN,the inflation rate is predicted at around of 3-3.4% increase compared to theusual inflation of around 1.78% (De Vera, 2018). There is a decrease in incometax but there is an increase in other taxes like VAT, automotive tax, fuel tax,sugar, tobacco and things like stamps or documents tax just to name afew.(Collas-Monsod, 2018; Dela Paz, 2018; Gialogo, 2018). Theeffects that were mentioned paint a picture for Africa’s second point: how thepoor people are affected a lot in the process since they are now required to takeresponsibility for the losses in government earnings (Ballaran, 2018; Orellana,2018).
This severely affects the poorer side of the population because they mayhave extra money due to the increased take home pay but with the increase in allother areas, the additional pay is no longer felt since they have to pay a lotmore now for their needs (Collas-Monsod, 2018). For those above the povertyline, the increases in various tax offers little flexibility (even restricts)in terms of purchases and possible ways to spend their extra money. (Dela Paz,2018) Calling the whole idea of reducing taxes “asmoke screen” (Ballaran, 2018), Africa concludes with two suggestions to reducerevenue loss which are “to first, improve the gathering of corporate income taxand second, increase tax rates for families of more privileged backgroundssince according to Africa, the tax system should really be based on thedifference in terms of earnings and property or belongings of the people”(Ballaran, 2018).