Lawmakers ask Supreme Court: Stop TRAIN

Motorists line up at a gas station in Paco, Manila that has implemented an increase in pump prices, claiming it is due to the TRAIN law. Last week, the Department of Energy said it would be premature for oil firms to raise prices as it ordered them to maintain a supply enough for 15 days. The new taxes should be applied only on new supply.       

Miguel De Guzman

Lawmakers ask Supreme Court: Stop TRAIN

Jess Diaz (The Philippine Star) - January 12, 2018 - 12:01am

MANILA, Philippines — Leftist lawmakers are seeking the help of the Supreme Court (SC) in stopping the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law that they say was railroaded by their colleagues in violation of the Constitution.

“Our petition is premised on the fact that the House blatantly violated the Constitution and its own rules in ‘ratifying’ the conference committee report on the TRAIN bill without a quorum and without a vote,” Bayan Muna Rep. Carlos Zarate said yesterday.

Thus, he said he and his colleagues are asking the high court in a 34-page petition to issue a temporary restraining order (TRO) on the enforcement of the law and declare it as invalid from the beginning.

Malacañang said it is ready to defend the tax reform law, citing the government’s power to tax.

The other petitioners were ACT Teachers party-list Rep. Antonio Tinio and Anakpawis Rep. Ariel Casilao.

“There was grave abuse of discretion on the part of the respondent House leaders when they had the TRAIN bicameral conference committee (BCC) report ratified despite the glaring lack of quorum and several other violations of the Constitution and the House Rules insofar as it implements the Constitution,” the petitioners stressed.

They said that only around 10 lawmakers, including the petitioners, were present during the ratification stage.

Majority leader and Ilocos Norte Rep. Rodolfo Fariñas had said the TRAIN bill was “validly ratified.”

Isabela Rep. Rodolfo Albano III said the SC, in resolving the ratification issue, would go by the journal of proceedings of the House.

“The journal will reflect the presence of an overwhelming number of members when the presiding officer ordered a roll call at 4 p.m. That quorum was carried until adjournment,” he said.

Albano said that in the remote possibility that the SC finds the ratification improper, all the House needs to do is to correct the ratification.

Zarate said once the SC “favors our petition, it will send a strong message to the leaders of Congress that they cannot just pass a law without a quorum and without a vote, that they have to strictly observe the Constitution and, in particular, the rules on ratification.

“The success of this petition will delay the implementation of the TRAIN and give more time for the people to protest and exert pressure against the TRAIN’s anti-poor regressive taxes,” he said.

He said their studies show that new and higher levies under TRAIN would offset whatever amount employees would save from income tax reduction.

“The new taxes include those on diesel, liquefied petroleum gas, kerosene and bunker fuel for electricity, while the higher impositions include those on gasoline and coal. These levies have already taken effect and consumers are now feeling their adverse impact,” he said.

Petitioners also argued that there was grave abuse of discretion on the part of President Duterte when he signed the law that was not properly ratified by Congress.

“There having been no valid ratification of the TRAIN BCC report, there was consequently no valid presentment to the President of a bill for his enactment,” the petitioners said.

Duterte signed the TRAIN law, now Republic Act 10963, last Dec. 19.

President Duterte, Speaker Pantaleon Alvarez and other House leaders were named respondents in the petition.

The senators who approved the law were not in the list of respondents.

While the lack of quorum was the petitioners’ main argument against the TRAIN, they also cited the law’s not being beneficial to ordinary Filipinos even if it slashes personal income tax rates.

The petitioners said they would have to study the legality of the law’s key provisions and file a separate petition against it if necessary.

For instance, they said new taxes on petroleum products and sugar-sweetened beverages would hit the poor and low-income earners the hardest.

Power to tax

But presidential spokesman Harry Roque said there was “presumption of regularity” when Duterte signed the tax law.

“The power to tax is one of the three indisputable powers of the state – aside from imminent domain and police power,” he said in Filipino in a television interview.

Later in a press briefing at Malacañang, Roque denied that congressmen railroaded the passage of the TRAIN. He also slammed his former House colleagues for contesting the law before the high tribunal.

“Well, I don’t think they are a court. Only the court can conclude that there was grave abuse of discretion,” Roque said.

Bureau of Internal Revenue (BIR) Commissioner Caesar Dulay said they would abide by whatever is decided by the SC. “If they issue a TRO then we have to abide because that is from the SC. This is a democratic country. This is the beauty of our system of government,” he said.

Contrary to government claims, the TRAIN law would result in sharp price hikes with the low income and poor families to be affected the most, Sens. Panfilo Lacson and Bam Aquino IV said, citing insights from experts.

Lacson said the one percent impact on inflation cited by the National Economic and Development Authority (NEDA) might be too conservative, according to several experts he had consulted, including topnotch accountants.

He said he was told the more realistic impact on inflation would be in the range of two to four percent, primarily because of the hike in the excise tax on fuel.

He said higher fuel prices would also impact heavily on the transport of passengers and goods.

Lacson said he understands NEDA’s downplaying the impact of the TRAIN on inflation, as it doesn’t want to spark panic among ordinary Filipinos.

He voted against the measure after his proposals to remove several value-added tax (VAT) exemptions were rejected.

Lacson argued that the burden of the TRAIN on consumers would have been minimized or even avoided had his proposed amendments to VAT been accepted.

He said that the overall incremental revenues from the removal of the VAT exemptions alone would have already surpassed the P92.4-billion projected revenue from the TRAIN.

Under Lacson’s proposal, the lines of exemption from the VAT would be reduced from the current 143 to 65.

Based on his calculation, the removal of the VAT exemptions would have generated an additional P117 billion for the government.

Highest VAT rate

Lacson pointed out that the Philippines has the highest VAT rate among Southeast Asian countries and one of the lowest if not the lowest in tax collection efficiency.

Aquino said middle class families would probably be able to cope with the increase in prices but the low income and poor families would definitely suffer from the impact of the TRAIN.

He urged the DOF and the Department of Social Welfare and Development (DSWD) to speed up the rollout of the cash transfer program to help mitigate the impact of the TRAIN on 10 million poor families.

He noted that the funds needed for the cash transfer program were already in the 2018 national budget and pertinent agencies only need to facilitate their disbursement and distribution.

Based on recommendation by the DOF, the law provides a cash grant of P200 a month to poor families on the first year. The monthly financial assistance will be increased to P300 for the second and third year to help cover the increase in the prices of basic goods.

“Without a cash transfer program in place, poor Filipinos will bear the brunt of the increase in prices of goods and services due to the TRAIN,” Aquino said.

Meanwhile, prices of low-end cars – or those favored by ordinary wage earners – increased this week as a result of the TRAIN.

In contrast, prices of multimillion-peso sport utility vehicles – called toys of the rich – went down by as much as P350,000.

According to auto website, Toyota, the country’s largest automaker, has adjusted its selling prices to reflect the excise taxes contained in the TRAIN law.

Most Toyota vehicles now cost more as a result of the TRAIN. The cheapest variant, Wigo, which used to cost P526,000, now sells for P537,000, or P11,000 more.

On the other hand, the luxurious sport utility vehicle Land Cruiser now costs less.

The price of the premium Land Cruiser, which used to sell for P5 million, is now P350,000 lower at P4.650 million. The basic Cruiser variant now sells for P4.284 million, down from P4.557 million, or a P273,000 price cut. – Edu Punay, Christina Mendez, Marvin Sy

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