Derailing TRAIN

Published January 15, 2018, 10:00 PM

by Restituto Cayubit

By Tonyo Cruz

Tonyo Cruz
Tonyo Cruz

Last week, an economist claimed that it is an “oversimplication” to say that President Duterte’s tax reform law is anti-poor and pro-rich.

The economist went on to say, quite duplicitously, that “those who dismiss TRAIN as such, without a deeper explanation and a reasonable justification, are ideologically driven, are opposing for the sake of opposing, are misinformed, or are not equipped with the analytical tools to dissect TRAIN.”

I say duplicitous because these are mainly ad hominem arguments that we don’t expect from an economics scholar. The economists, especially ones who favor TRAIN, are virulently ideological especially on trickle-down economics, low taxes for the wealthy and neoliberal policies of deregulation, liberalization and privatization. They consider these as gospel truth.

Such virulently ideological economists are trained to misportray their views as “sober” and “unprejudiced.” In their self-serving and warped conception of politics and economics, only the critics are “ideological,” especially those who could expose their duplicity.

Based on the latest December 2017 DOF data, economists and analysts at IBON Foundation estimate that a chief executive officer (CEO) – already earning P494,471 monthly – will take home an extra P88,568 annually.

“Middle income and lower-middle families meanwhile take home an additional P7,880 to P24,343 under TRAIN,” IBON adds.

IBON calculations also show these: Every rice farmer (first and lowest income decile) will lose P646 annually; every farm worker (second income decile) will lose P937; every construction worker (third income decile) will lose P1,141; every private school teacher (fourth income decile) will lose P1,363; every bookkeeper (fifth income decile) will lose P1,591; and P1,887 will be taken from every machine tool operator (sixth income decile).

“About 15.2 million families who already do not pay income tax because they are minimum wage earners or informal sector workers with erratic incomes will not have any income tax gains. Yet while not getting increased take home pay, they will have to endure price hikes as a direct or indirect effect of higher consumption taxes,” IBON stresses.

TRAIN’s fuel excise taxes are set to kick in soon, with petroleum companies already informing the Department of Energy of possible price shocks. The banks have immediately implemented the higher tax on FCDU deposits, and the higher documentary stamp taxes. Juices, softdrinks and three-in-one coffee mixes would be slapped a hefty Sugar-Sweetened Beverage Tax. Vehicles bought by the middle-class and entrepreneurs would be taxed more so that super-expensive cars of the wealthy could be taxed less.

All told, President Duterte, Congress and their team of economists cannot deny they hijacked the middle-class demand for much-deserved tax relief in order to sneak in tax cuts for the wealthy that would be paid for through new and higher taxes by the middle class and the poor.

The P200 monthly doleouts are an admission of TRAIN’s harsh effects on the poor, and cannot possibly be enough to mitigate the effects of such an avalanche of new and higher taxes. Unlike the rich, the poor cannot pass on these new and higher taxes.

Yes, folks, TRAIN is the single-biggest tax cut package for the wealthy, and the single-biggest avalanche of new and higher taxes ever to have been dropped on the Filipino people.

The taxes would be slapped and collected, regardless of ideology. Fortunately for the well-paid economists serving the oligarchs and the wealthy, their generous incomes and grants from consultancies and projects promoting TRAIN would shield them from the new reality they help impose on everyone else.

It is quite clear why some academics are acting this way. TRAIN is not the end. It is only the means to raise revenue for government. Duterte and Congress have long said TRAIN revenues would go to funding the BUILD BUILD BUILD projects which oligarchs cannot wait to take advantage of, in the same way they took advantage of the MRT. The “sober” and “unprejudiced” academics would also be there to partake in the blood money as consultants of government or oligarchs.

Aside from the oligarchs, the International Monetary Fund, World Bank, and creditor banks are happy with TRAIN. They have asked the government to expand the tax base (meaning, raising consumption taxes and other indirect taxes) before giving any form of tax cuts. TRAIN gave them both and more: TRAIN assures them that government would have money to pay for old and new external debts, more money to give to PPP projects they prescribe, and some money for temporary doleouts.

In most of the world’s countries, citizens have a fairly simple yardstick when looking at any so-called tax reform being proposed by the government. Their first and most important question is: Would this tax reform measure give tax cuts to the wealthy? If the answer is yes, it immediately becomes toxic and would be roundly rejected by citizens. Because they know that tax cuts for the wealthy mean tax hikes for everyone else. Somebody has to pay for those tax cuts for the rich.

That is among the questions the ideological economists supporting TRAIN are afraid to hear and to answer, point blank. And which we should courageously ask now: Who will pay for the lower donor, estate and income taxes for the wealthy? Who will carry the burden of the new and higher consumption taxes the wealthy have promised they will pass on?

Lest we forget, aside from further enriching the oligarchy and widening the income gap between the rich and the poor, TRAIN would serve the kind of politics that authored and produced it. The middle-class and the poor would be made to shoulder the burden of financing a corrupt and tyrannical regime now aspiring to rule indefinitely.

Follow me on Twitter @tonyocruz and check out my blog tonyocruz.com

 
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