In thearticle “Economic expert warns Train can deliver negative effects to economy”(2018 Jan.
06, Inquirer), J.Ballaran reports on the criticisms by economic expert Sonny Africa about thegovernment’s understatement of the effects of the newly passed bill. Africamentions two main points as his basis for his criticisms against thisstatement. First,there will be an effect in terms of taxes and the inflation rate. Under TRAIN,the inflation rate is predicted at around of 3-3.4% increase compared to theusual inflation of around 1.78% (De Vera, 2018).
There is a decrease in incometax but there is an increase in other taxes like VAT, automotive tax, fuel tax,sugar, tobacco and things like stamps or documents tax just to name afew.(Collas-Monsod, 2018; Dela Paz, 2018; Gialogo, 2018). Theeffects that were mentioned paint a picture for Africa’s second point: how thepoor people are affected a lot in the process since they are now required to takeresponsibility for the losses in government earnings (Ballaran, 2018; Orellana,2018).
This severely affects the poorer side of the population because they mayhave extra money due to the increased take home pay but with the tax increases,the additional pay is no longer felt since they have to pay a lot more now fortheir needs (Collas-Monsod, 2018). For those above the poverty line, theincreases in various tax offers little flexibility (even restricts) in terms ofpurchases and possible ways to spend their extra money. (Dela Paz, 2018) Callingthe whole idea of reducing taxes “a smoke screen” (Ballaran, 2018), Africaconcludes with two suggestions to reduce revenue loss which are “to first,improve the gathering of corporate income tax and second, increase tax ratesfor families of more privileged backgrounds since according to Africa, the taxsystem should really be based on the difference in terms of earnings andproperty or belongings of the people” (Ballaran, 2018).