Government Looks Back at 1st Year of TRAIN Law, Justifies Oil Excise Tax Hike

As the year 2018 draws to a close today, the government looks back at the first year of the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

Part of the TRAIN Law cut workers’ tax rates and increased the level of tax-free annual income to PHP250,000, giving employees a larger take-home pay to spend for their families. According to the country’s finance officials, this reform makes the country’s tax system simpler, fairer, and more efficient since it lessens the overall tax burden on the poor and the middle class.

With its citizens contributing less tax to the government, one of the measure the latter adopted to address this impact was by, among other things, raising the excise taxes on fuels.

In a recent presentation of the Department of Finance (DOF) to stakeholders, the agency said that “oil excise is a highly progressive tax since those who consume more will pay more tax compared to those who consume less.”

Citing a DOF study, finance department officials said the top 10 percent of Filipino households who earn about PHP113,000 a month consume nearly 51 percent of fuel. On the other hand, the top one percent of Filipino households who earn PHP288,000 and more a month consume 13 percent of fuel.

“Thus, the hike on excise tax impacts more on households who earn more,” the DOF concluded.

So, do you agree with the government’s analysis?