By now, you’re probably already familiar with the Tax Reform for Acceleration and Inclusion (TRAIN) law. Last January, we listed the reasons why the new tax law shouldn’t scare you, and until now, this topic is still being discussed with mixed emotions and opinions from consumers, employees, vendors, and everyone else.
From personal income tax (PIT) to consumer goods such as sweetened beverages and cigarettes, the TRAIN has definitely shown significant changes in our everyday lives. Here’s a quick rundown of the things you should know about this controversial tax law.
The national government increased revenue by 16.4%
Thanks in part to the TRAIN law, the national government managed to raise ₱619.84 billion or 16.4% growth in revenue in the first quarter of 2018. Meanwhile, the Bureau of Internal Revenue (BIR) reported that TRAIN boosted its tax collection by ₱12.5 billion. According to this news article, despite the ₱3 billion decrease in the value-added tax (VAT) collections, there were gains from petroleum excise tax that amounted to ₱4.73 million.
The national government spending increased by 27%
The Department of Budget and Management (DBM) revealed that the government spending in March reached ₱313.1 billion, sustaining the robust growth in disbursements for the first quarter of the year.
A contributor to this spending is the first batch of releases of health insurance premiums of senior citizens which amounted to ₱15.1 billion, under the National Health Insurance Program.
Inflation moved at a faster rate at 4.5%
Inflation continued to grow at a faster rate at 4.5% in April 2018, a bit far from last year’s 3.2%. The Philippine Statistics Authority (PSA) shared that the uptrend “can be attributed to higher increments recorded in the indices of the following commodity groups:”
- Alcoholic Beverages and Tobacco (20%)
- Clothing and Footwear (2.2%)
- Housing, Water, Electricity, Gas, and Other Fuels (3.0%)
- Furnishing, Household Equipment and Routine Maintenance of the House (2.8%)
- Health (2.8&)
- Transport (4.9%)
- Recreation and Culture (1.5%); and
- Restaurant and Miscellaneous Goods and Services (3.4%)
Automobile prices increased
Remember when we showed you our list of ten cheap cars from 2017 and how their prices have changed with the implementation of the TRAIN law? Well, it’s still true that some of the cheap cars in the Philippines have increased their prices to as much as 18%.
For example, if Mitsubishi Mirage G4 GLX’s current selling retail price (SRP) is at ₱700,000, the estimated new SRP can be as much as ₱712,544. The estimated new SRP is computed as:
Net manufacturer’s price + excise tax + VAT = new SRP
What about car insurance? Don’t worry, the rates of car insurance premiums haven’t changed despite the TRAIN law. However, since the SRPs of new cars are higher because of the new excise taxes, there will be higher premium rates compared to the previous years. But this isn’t a reason to not buy car insurance; in fact, with fuel and car prices increasing, you should consider getting car insurance more to avoid hassles like paying for repairs and other expenses in case of emergencies.
Compare car insurance plans with GoBear to see which car insurance plan fits your and your car’s needs.