Senate starts probe on TRAIN’s ill effects

MANILA, Philippines — The Senate committee on economic affairs will start reviewing today the reported adverse impact of the Tax Reform for Acceleration and Inclusion (TRAIN) on the poor even as some senators called for the suspension of the law as inflation surged to 4.5 percent last month.

The hearing of the committee, chaired by Sen. Sherwin Gatchalian was prompted by a resolution filed by Sen. Paolo Benigno Aquino IV, who said the poor feel the impact of the law most.

Sen. Joseph Victor Ejercito said inflation exceeded the two to four percent full-year target and it might be wise to consider suspension of the TRAIN law “if the trend continues to breach the inflation threshold.”

“My worst nightmare about the TRAIN law has become a reality. I had warned this before that the TRAIN is inflationary in nature. The common people may not know what inflation is, and they don’t care. What they do know and what they care about is that prices of food and other necessities have all gone up,” Ejercito said.

He said economic managers should seriously assess whether the increase in inflation is still manageable. Otherwise, implementation of TRAIN should be suspended or reviewed.

The idea of tax reform was to decrease the personal income tax, giving people more purchasing power.

However, he said, the rising prices of commodities would negate the positive impacts of the TRAIN law on income.

Ejercito said the negative effects of the higher inflation are felt more by the bottom 30 percent of Filipino households.

Aquino said the government promised to dole out P200 a month for 10 million poor families but so far only 20 percent of the targeted households have been given subsidies. 

Gatchalian said the suspension of the TRAIN is possible if inflation cannot be managed.