{"id":67083,"date":"2020-09-24T23:41:21","date_gmt":"2020-09-24T15:41:21","guid":{"rendered":"https:\/\/primer.com.ph\/blog\/?p=67083"},"modified":"2022-09-24T23:42:08","modified_gmt":"2022-09-24T15:42:08","slug":"comprehensive-tax-reform-program-what-you-need-to-know","status":"publish","type":"post","link":"https:\/\/primer.com.ph\/blog\/2020\/09\/24\/comprehensive-tax-reform-program-what-you-need-to-know\/","title":{"rendered":"Comprehensive Tax Reform Program: What you need to know"},"content":{"rendered":"<p><em>There have been changes since RA 10963 was passed last December 2017. An updated version of this guide appears here:\u00a0<a href=\"https:\/\/primer.com.ph\/tips-guides\/2018\/01\/04\/train-package-one-a-need-to-know-guide-to-republic-act-10963\/\" target=\"_blank\" rel=\"noopener\">TRAIN Package One: A Need-To-Know Guide to Republic Act 10963<\/a><\/em><\/p>\n<p>The country is buzzing with one of the priority reforms of the Duterte administration: the\u00a0<strong>Tax Reform for<\/strong>\u00a0<strong>Acceleration and Inclusion (TRAIN)<\/strong>, better known as the Comprehensive Tax Reform Program.<\/p>\n<p>But what is it really and how will it help us perform better as a nation?<\/p>\n<p><strong>What is TRAIN?<\/strong><\/p>\n<p>There\u2019s been a lot of confusion for the most part since our tax laws haven\u2019t been updated for two decades<sup>1<\/sup>\u00a0and people are used to seeing and hearing the same tax rates over and over again.<\/p>\n<p>There\u2019s also the fact that people who are earning a lot seem to have more money to spend, and it\u2019s not just because they\u2019re earning more than us or know how to handle money better than us. They\u2019re actually paying less tax than they should!<\/p>\n<p>That, however, is not their fault. It\u2019s more to do with the complicated tax system (which we will not go into detail right now).<\/p>\n<p><strong>Comprehensive Tax Reform Program: What you need to know<\/strong><\/p>\n<p>Suffice to say that the current tax system has made everyone\u2019s lives a living hell, including the rich.<\/p>\n<p style=\"text-align: center\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-4711\" src=\"https:\/\/primer.com.ph\/tips-guides\/wp-content\/uploads\/sites\/5\/2017\/05\/CTRP-Package-ONE-no-SSB.jpg\" alt=\"\" \/><span style=\"font-size: 10pt\"><em>TRAIN SIMPLIFIED. Here&#8217;s the shortest version of the new tax reform program. For specifics, you may want to read on.<\/em><\/span><\/p>\n<p>This is where the new tax reforms package comes in. TRAIN addresses these problems by reducing personal income tax, simplifying estate and donor\u2019s taxes, expands the value-added tax (VAT) base, and increasing oil and automobile excise taxes (gasp!).<\/p>\n<p>What TRAIN wants to achieve can be boiled down to these:<\/p>\n<ul>\n<li><em>More money in almost everyone\u2019s pockets.\u00a0<\/em>The proposed tax reforms look to put more money into people\u2019s pockets by revamping the tax table to keep up with the times.<\/li>\n<li><em>Simplify VAT.\u00a0<\/em>Today\u2019s VAT is confusing. There are too many exemptions (132) even though we\u2019re being charged 12%, which is 2% higher than some of our closest neighbors (both Indonesia and Vietnam are at 10%), and their exemptions aren\u2019t even half of ours COMBINED. Singapore\u2019s goods and services tax (GST) is at 7%.<\/li>\n<li><em>Automobile and oil excise tax.\u00a0<\/em>Cars aren\u2019t that cheap, but they\u2019re not that expensive either. If you have the money to buy one, you probably have enough money to spare the government. Oil prices, on the other hand, have been stable (more or less), and are seen staying put for the next five or six years, so while this will increase gas prices, it wouldn\u2019t hurt as much as people say it would (or so says the proposed reforms).<\/li>\n<\/ul>\n<p>Let\u2019s talk about the three most prevalent sources of taxes: personal income tax, VAT, and oil and automobile excise taxes.<\/p>\n<p><strong>Reduced personal income tax (PIT)<\/strong><\/p>\n<p>Let\u2019s just say this made the most buzz online (next to more oil and automobile taxes). When people started hearing that their tax rates will drop, people started cheering. There were those who were confused, and people who asked \u201cwhere will the government get its money if they don\u2019t tax us?\u201d<\/p>\n<p>What \u201creducing PIT\u201d will do is this:\u00a0<em>Simplify the personal income tax system.\u00a0<\/em>Imagine going from this\u2026<\/p>\n<p style=\"text-align: center\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-4713\" src=\"https:\/\/primer.com.ph\/tips-guides\/wp-content\/uploads\/sites\/5\/2017\/05\/old-tax-table.jpg\" alt=\"\" \/><span style=\"font-size: 10pt\"><em>IMAGE Bureau of Internal Revenue<\/em><\/span><\/p>\n<p>\u2026 to this.<\/p>\n<p style=\"text-align: center\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-4704\" src=\"https:\/\/primer.com.ph\/tips-guides\/wp-content\/uploads\/sites\/5\/2017\/05\/CTRP-Package-ONE_PIT-Brackets_UPDATED.jpg\" alt=\"\" \/><\/p>\n<p>Yeah. Not as confusing, right? All you have to look at is how much you earn in a year, take a portion of that, and give it to the government via the Bureau of Internal Revenue (BIR). If the chart confuses you, here are a couple of graphics that should hit home:<\/p>\n<p style=\"text-align: center\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-4705\" src=\"https:\/\/primer.com.ph\/tips-guides\/wp-content\/uploads\/sites\/5\/2017\/05\/CTRP-Package-ONE_PIT-taxpayer-impact-CCA_UPDATED.jpg\" alt=\"\" \/><span style=\"font-size: 10pt\"><em>EARNING SOMEWHERE AROUND P20,000? Here\u2019s how your taxes will look like.<\/em><\/span><\/p>\n<p>This extends all the way to P21,777.15 per month as per the Department of Finance\u2019s (DOF) Tax Calculator<sup>2<\/sup>, which is based on the tax reforms under TRAIN. Minimum wage earners won\u2019t feel the effects as they\u2019re already exempt from paying taxes, but if you\u2019re earning a bit more than minimum (i.e. around P15,000), you\u2019ll still feel a difference as you won\u2019t be paying taxes anymore.<\/p>\n<p style=\"text-align: center\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-4707\" src=\"https:\/\/primer.com.ph\/tips-guides\/wp-content\/uploads\/sites\/5\/2017\/05\/CTRP-Package-ONE_PIT-taxpayer-impact-MED-SPEC_UPDATED.jpg\" alt=\"\" \/><span style=\"font-size: 10pt\"><em>MANAGEMENT-LEVEL? You\u2019ll be paying income taxes AND saving money at the same time.<\/em><\/span><\/p>\n<p>If you\u2019re earning around P50,000 a month, you can be happy as you\u2019re doing your civic duty while still saving money for the things that matter.<\/p>\n<p style=\"text-align: center\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-4706\" src=\"https:\/\/primer.com.ph\/tips-guides\/wp-content\/uploads\/sites\/5\/2017\/05\/CTRP-Package-ONE_PIT-taxpayer-impact-HIGH-INCOME_UPDATED.jpg\" alt=\"\" \/><span style=\"font-size: 10pt\"><em>SIX DIGIT PAYCHECK? Prepare to \u201ctighten your belts\u201d as we Filipinos love to say.<\/em><\/span><\/p>\n<p>This is a ball-park amount, but it should be enough to tell you that if you\u2019re one of those high-rollers, you\u2019ll have to do a bit more penny pinching than usual.<\/p>\n<p style=\"text-align: center\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-4703\" src=\"https:\/\/primer.com.ph\/tips-guides\/wp-content\/uploads\/sites\/5\/2017\/05\/CTRP-Package-ONE_PIT-bonus-exemptions.jpg\" alt=\"\" \/><\/p>\n<p>Taxes on your bonuses (if you\u2019re getting taxed at all) will stay the same: you get to keep P82,000 of your bonuses plus whatever\u2019s left after applying taxes.<\/p>\n<p>If you want to know how you will be affected salary-wise, visit the DOF Tax Calculator website and compare how much you get taxed now versus how much you\u2019ll get taxed after the tax reforms push through.<\/p>\n<p><strong>Simpler VAT<\/strong><\/p>\n<p>Right now, our VAT looks like this:<\/p>\n<p style=\"text-align: center\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-4708\" src=\"https:\/\/primer.com.ph\/tips-guides\/wp-content\/uploads\/sites\/5\/2017\/05\/CTRP-Package-ONE_VAT.jpg\" alt=\"\" \/><span style=\"font-size: 10pt\"><em>SIMPLE? Wait \u2018till you see what\u2019s next.<\/em><\/span><\/p>\n<p style=\"text-align: center\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-4709\" src=\"https:\/\/primer.com.ph\/tips-guides\/wp-content\/uploads\/sites\/5\/2017\/05\/CTRP-Package-ONE_VAT-comparison_v2.jpg\" alt=\"\" \/><\/p>\n<p>A bit absurd? A lot of people seem to think so. It\u2019s the highest among our neighbors at 12%, but what baffles us the most is the number of exemptions (59 lines plus 84 via special laws). Yes, you can take away 11 from that because of the overlap between the exemption lines and special laws, but that still leaves us with over 130 exemptions.<\/p>\n<p style=\"text-align: left\">What is TRAIN going to do about this? Well, to put it simply, TRAIN will limit these exemptions to necessities \u2013 raw food, education, and health.<\/p>\n<p style=\"text-align: center\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-4710\" src=\"https:\/\/primer.com.ph\/tips-guides\/wp-content\/uploads\/sites\/5\/2017\/05\/CTRP-Package-ONE_VAT-reforms.jpg\" alt=\"\" \/><span style=\"font-size: 10pt\"><em>NO LONGER TAX-FREE. To be more specific, these are the things that will be taxed.<\/em><\/span><\/p>\n<p>What does this mean for us? It means that we\u2019ll be paying more for things we need every day, but not by much. Oh, and by the way, senior citizens and PWDs will still be exempted from paying taxes.<\/p>\n<p><strong>More oil and automobile excise taxes<\/strong><\/p>\n<p style=\"text-align: center\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-4700\" src=\"https:\/\/primer.com.ph\/tips-guides\/wp-content\/uploads\/sites\/5\/2017\/05\/CTRP-Package-ONE_EXCISE.jpg\" alt=\"\" \/><\/p>\n<p>Yes, it\u2019s happening. Oil prices will go up, along with the prices of buying a ride. A lot of motorists are already alarmed by this, saying this will do more harm than good.<\/p>\n<p style=\"text-align: center\"><img decoding=\"async\" class=\"aligncenter size-full wp-image-4701\" src=\"https:\/\/primer.com.ph\/tips-guides\/wp-content\/uploads\/sites\/5\/2017\/05\/CTRP-Package-ONE_EXCISE-auto-rates-2.jpg\" alt=\"\" \/><span style=\"font-size: 10pt\"><em>PAY MORE FOR CARS. Here\u2019s how much you\u2019ll pay if you bought the cars you may have right now.<\/em><\/span><\/p>\n<p>The government, however, sees things differently. For one, they feel that by charging a higher tax for cars, they\u2019re effectively cutting off an influx of cars that might come when the PIT is lowered; i.e. the daily traffic wouldn\u2019t get worse.<\/p>\n<p>More than the traffic situation, the government sees this particular excise tax as a way to get more funds if people still try to get more cars.<\/p>\n<p style=\"text-align: center\"><em><img decoding=\"async\" class=\"aligncenter size-full wp-image-4702\" src=\"https:\/\/primer.com.ph\/tips-guides\/wp-content\/uploads\/sites\/5\/2017\/05\/CTRP-Package-ONE_EXCISE-oil-rates.jpg\" alt=\"\" \/><span style=\"font-size: 10pt\">FUEL UP? You may want to rethink that once the tax reforms kick in.<\/span><\/em><\/p>\n<p>Higher oil prices might affect our day-to-day expenses (public transportation fares, basic goods, etc.), but the government doesn\u2019t see this affecting our expenses\u00a0<em>too much<\/em>. Besides, we\u2019ll have more money to spend from the income tax adjustments anyway.<\/p>\n<p>Recent data suggests that inflation will remain at about the same rate, and if it does go out of control, certain measures will be put in place, like the\u00a0<em>Pantawid Pasada\u00a0<\/em>Program and targeted cash transfers.<\/p>\n<p><strong>Conclusion<\/strong><\/p>\n<p>So far, these three (or four, depending on how you count them) will affect us the most. Their effects will be significant: people will have more money to buy things with, prices for goods and services will rise but not as much as we fear, and we\u2019ll have a more streamlined tax system compared to what we have today.<\/p>\n<p>The government, for their part, will have more money to invest in their many projects, most of which will help the country be even better off by 2022. The reforms will also make tax collection easier, which should make it easier for them to track where our taxes go.<\/p>\n<p>It looks like a win-win situation for both sides, but with the bill yet to be passed into law, any of its supposed effects, good or bad, remain to be seen.<\/p>\n<p>We\u2019d like to know what you think about the tax reforms being proposed. Hit us up in the comments section below for your thoughts on the tax reforms or the country\u2019s tax system in general.<\/p>\n<p>If you\u2019d like to delve deeper into the proposed reforms, you can visit their website<sup>3<\/sup>\u00a0to see information and the latest news about the proposed tax reforms.<\/p>\n<hr \/>\n<p><span style=\"font-size: 10pt\"><em>Written by Andronico Del Rosario<\/em><\/span><\/p>\n<p><span style=\"font-size: 10pt\"><em>Source:\u00a0<a href=\"http:\/\/www.dof.gov.ph\/taxreform\/\" target=\"_blank\" rel=\"noopener\">Department of Finance Tax Reform microsite<br \/>\n<\/a><\/em><em>All images grabbed from DOF<br \/>\n<sup>1<\/sup>\u00a0<a href=\"https:\/\/www.bir.gov.ph\/index.php\/tax-code.html\">National Internal Revenue Code of 1997<\/a>;\u00a0<sup>2<\/sup>\u00a0<a href=\"http:\/\/taxcalculator.dof.gov.ph\/\">Tax Calculator<\/a>;\u00a0<sup>3\u00a0<\/sup><a href=\"http:\/\/www.dof.gov.ph\/taxreform\/\" target=\"_blank\" rel=\"noopener\">dof.gov.ph\/taxreform<\/a><\/em><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>There have been changes since RA 10963 was passed last December 2017. An updated version of this guide appears here:\u00a0TRAIN Package One: A Need-To-Know Guide to Republic Act 10963 The country is buzzing with one of the priority reforms of the Duterte administration: the\u00a0Tax Reform for\u00a0Acceleration and Inclusion (TRAIN), better known as the Comprehensive Tax Reform Program. But what is it really and how will it help us perform better as a nation? What is TRAIN? There\u2019s been a lot of confusion for the most part since our tax laws haven\u2019t been updated for two decades1\u00a0and people are used to seeing and hearing the same tax rates over and over [&hellip;]<\/p>\n","protected":false},"author":7,"featured_media":67084,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15752],"tags":[],"class_list":["post-67083","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"acf":[],"jetpack_featured_media_url":"https:\/\/primer.com.ph\/blog\/wp-content\/uploads\/sites\/14\/2022\/09\/featured-1-1.jpg","_links":{"self":[{"href":"https:\/\/primer.com.ph\/blog\/wp-json\/wp\/v2\/posts\/67083","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/primer.com.ph\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/primer.com.ph\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/primer.com.ph\/blog\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/primer.com.ph\/blog\/wp-json\/wp\/v2\/comments?post=67083"}],"version-history":[{"count":1,"href":"https:\/\/primer.com.ph\/blog\/wp-json\/wp\/v2\/posts\/67083\/revisions"}],"predecessor-version":[{"id":67085,"href":"https:\/\/primer.com.ph\/blog\/wp-json\/wp\/v2\/posts\/67083\/revisions\/67085"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/primer.com.ph\/blog\/wp-json\/wp\/v2\/media\/67084"}],"wp:attachment":[{"href":"https:\/\/primer.com.ph\/blog\/wp-json\/wp\/v2\/media?parent=67083"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/primer.com.ph\/blog\/wp-json\/wp\/v2\/categories?post=67083"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/primer.com.ph\/blog\/wp-json\/wp\/v2\/tags?post=67083"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}