The Tax Reform for Acceleration and Inclusion (TRAIN) Act, officially cited

as Republic Act No. 10963, is the initial package of the Comprehensive Tax Reform
Program (CTRP) signed into law by President Rodrigo Duterte on December 19,
2017.[1] The TRAIN Act is the first of four packages of tax reforms to the National
Internal Revenue Code of 1997, or the Tax Code, as amended. [2] This package
introduced changes in personal income tax (PIT),[3] estate tax, donor's tax, value added
tax (VAT), documentary stamp tax (DST) and the excise tax of tobacco products,
petroleum products, mineral products, automobiles, sweetened beverages, and
cosmetic procedures.[4]
The prominent features of the tax reform are lower personal income tax and higher
consumption tax. Individual taxpayers with taxable income not exceeding ₱250,000
annually are exempted from income tax. The exemption for minimum wage earners is
retained in the revised tax system. Tax rates for individual taxpayers still follow the
progressive tax system[5] with the maximum rate of 35%, and minimum rates of 20%
(taxable years 2018 to 2022) and 15% (2023 onwards). On the other
hand, consumption taxes, in the form of higher excise tax on tobacco products,
petroleum products, automobiles, tobacco, and additional excise tax on sweetened
beverages and non-essential, invasive cosmetic procedures were introduced. It also
expanded the VAT base by repealing exemption provisions in numerous special laws.
The TRAIN Act is aimed to generate revenue to achieve the 2022 and 2040 vision of
the Duterte administration,[3] namely, to eradicate extreme poverty, to create inclusive
institutions that will offer equal opportunities to all, and to achieve higher income country
status. It is also aimed at making the tax system simpler, fairer and more efficient [6].
Regardless, contentions about the passing of this law has been present since the
beginning and the subsequent reception by the people since its ratification has been
controversial. In the first quarter of 2018, both positive and negative outcomes have
been observed. The economy saw an increase in tax revenues, government
expenditure and an incremental growth in GDP.[7] On the other hand, unprecedented
inflation rates that exceeded projected calculations,[8] has been the cause for much
uproar and objections. There have been petitions to suspend and amend the law, so as
to safeguard particular sectors from soaring prices.[9][10][11]

Vision and goals of TRAIN[edit]

The TRAIN Act aims to address the reputed weaknesses of the Tax Code, specifically through the
following objectives:[3]

 First, it intends to simplify the previous system to make it more straightforward and intuitive.
 Second, it intends to create a more "just" taxation scheme, wherein taxation is staggered and
distributed on the basis of financial capability and the underprivileged are able to reap more
advantages.
 Third, it intends to improve the efficiency by which tax is collected, particularly tackling issues of
compliance.
 Fourth, it increases the tax burden felt by the general population thus increasing the overall
inflation rate.
The changes instituted by the tax reform is expected to be able to increase revenue to finance the
infrastructure, healthcare and education programs of the Duterte administration.[12][1] The notion that
the poor will be taxed less than the wealthy population is actually a propaganda widely spread by the
government, the additional taxes imposed by the government will just be passed down through the
lower and middle income class thus increasing the inflation.
In the long term, TRAIN Act is just the first from a series of tax reforms, as part of the CTSP, which
will be one of the principal means by which the 2020 and 2040 vision of the incumbent
administration is to be achieved. The vision in 2020 is that poverty will be reduced from 21.6% to
14%, while 2040 sees the Philippines as having “eradicated extreme poverty”, established “inclusive
economic and political institutions where everyone has equal opportunities” and achieved “high-
income country status”.[3] This can be achieved if economic growth can be sustained by at least 7%
each year and if the source of growth can be shifted to investment from consumption. This means
prioritizing investments on people through "health, education, life-long training, social protection,
infrastructure, and research and development" and investments on infrastructure to boost
productivity [13

Complementary measures[edit]
There are four (4) complementary measures undertaken to ensure the income from the
TRAIN Law will be properly allocated for the development of the Philippines as a nation.
These are the Tax Administration, Ear Making, Infrastructure Projects, and Social
Programs.[23]
Tax Administration[edit]
Steps to modernize and refine the tax administration processes are undertaken to
support the changes in tax policy so as to improve security against tax crimes and to
ensure taxpayer compliance. On top of improving electronic systems (e.g. eBIR forms,
Electronic Filing and Payment System, mobile payments) the following reforms are
implemented:[23]

 Mandatory fuel marking

 Provision for use of electronic receipts
 Connection of cash registers and point of sale machines to BIR servers for real time
reporting of sales and purchase data
 Relaxation of bank secrecy laws and automatic exchange of information to allow for more
effective prosecution of criminal cases
Ear Marking[edit]
For 5 years from the law's enactment, all revenues will be set aside for infrastructure
and social programs only, with a 70% and 30% portion respectively.
Infrastructure Projects[edit]
Infrastructure projects that will receive priority funding include the Build, Build, Build
Program that tackles the problem of congestion through the construction of public
transport systems and road networks and the refurbishing and enhancing of military
facilities. Additionally, part of the 70% will be allocated to the building of sports facilities
in public schools as well as amenities that will allow access to potable water in public
spaces.[23]
Social Programs[edit]
The social programs that will receive priority funding from 30% of revenues include: [23]

 Programs for sugar farmers to increase productivity, provide livelihood opportunities,

develop alternative farming systems, and enhance farmer's income
 Social mitigating measures and investments in education, health, social protection,
employment, and housing for poor and near-poor households
 Unconditional cash transfer to the poorest 10 million households
 Social benefits card to determine qualified beneficiaries (fuel vouchers for PUJs, fare
discount for all public utility vehicles, discounted purchase of NFA rice, free skills training
under TESDA)
Unconditional cash transfers (UCT)[edit]
In order to provide provisional protection for vulnerable households from the initial shock
of the TRAIN Law, unconditional cash transfers are dispensed. On the first year,
beneficiaries receive Php200 per month. In the succeeding 2 years, they receive P300
per month. The UCT is obtained from oil excise tax revenues. In addition to the UCT,
social welfare cards are provided to aid in continuous conferring of benefits and
subsidies to the poorest households. This includes subsidies for "medicine,
transportation, rice, and vocational trainings".[23]