Why the New Tax Law Shouldn’t Scare You
The new Tax Reform for Acceleration and Inclusion (TRAIN) law stirs mixed emotions and opinions among Filipinos from all walks of life. TRAIN has either amused or confused consumers, employees, vendors and even homemakers considering a lot of articles online have posted it as more of a nuisance than an advantage.
Amidst the muddled diverse views on the new tax law, GoBear has carefully looked into the latest legislation and compiled a few excellent reasons why the first package of reforms shouldn’t scare you.
Personal Income Tax (PIT) and Employees
TRAIN has been most popular among employed individuals regarding income tax rates. People who are earning less than Php250,000 annually will be exempted from tax charges while those earning more than Php250,000 but above Php400,000 will have to pay 20% tax on anything over the Php250,000 limit. If this is so, employees with two dependents earning Php15,000 are saved from paying Php706.00 monthly or Php8,472.00 fee due each year.
On the other hand, those earning Php30,000 monthly with two dependents, with a rate more than Php250,000 but less than Php400,000 a year can save as much as Php2,487.00 per month or Php29,844.00 annually.
Based on the new tax system, an employee can take home more significant amount of compensation, which can be spent on other necessities required to maintain a household.
The minimum monthly salary where a taxpayer can get the maximum additional take-home pay per number of dependents is at ₱162,000.
• Single/Married - ₱8,463.33
• With 1 dependent - ₱7,796.67
• With 2 dependents - ₱7,130.00
• With 3 dependents - ₱6,463.33
• With 4 dependents - ₱5,796.67
An excise tax is levy imposed on the consumption goods including unleaded premium gasoline, kerosene, LPG, cigars and cigarettes, and selling prices of automobiles and services. Here is a clearer picture of why commuters and consumers should not worry.
TRAIN has allowed for the increase of diesel fuel at Php2.50 per liter. Although transport groups have been asking for a fare hike of Php4.00 leading to Php12 minimum jeepney fare due to TRAIN, the LTFRB has confirmed that any fare increase will follow the process and will not immediately be implemented. In case the petition will be approved and realized anytime soon, here is a view on how daily commutes can be affected.
Say, for instance, an employee with a salary of Php50,000, married with two dependents, takes the following on a daily basis:
2 jeepney rides from home to work = Php16
2 jeepney rides from work to home = Php16
Total per day: Php32
Total per month: Php832
2 jeepney rides from home to work = Php24
2 jeepney rides from work to home = Php24
Total per day: Php48
Total per month: Php1,248
It may be true that sweetened beverages have increased to a maximum of Php12 per liter, not all consumers should worry about the new tax law because it does not cover all milk products, natural fruit juices, natural vegetable juices, medically indicated beverages and coffee products.
Consumers of soft drinks and cigarettes will initially frown at how the TRAIN affected the prices, but then again, let GoBear enlighten you on this aspect.
1.5 liters of cola per day: Php50
6 liters of cola per week: Php200
1.5 liters cola per day: Php72
6 liters of cola per week: Php272
A difference of Php72 pesos per week will be spent more on cola and other sweetened beverages after TRAIN. While it is true that consumers will be expending a lot more, it is time to realize that sweetened beverages like cola and energy drinks are not actually beneficial to our health. Instead of complaining at how you have been deprived of a can of Coke, think of spending on more nutritious products, which are not covered by the imposed excise tax system.
The 2018 TRAIN may sound a bit scary to those planning to buy a new car or those who want to spend more on life’s luxuries by getting a bank loan. It may seem disadvantageous to some, but as they say, when life throws stones at you, build a stronger fortress. Look at how the monthly savings can be used to fund other essentials or to be saved for future use. Review your finances, create a better budget plan and begin a more financially-efficient 2018. After all, life is a “train” ride that leads you to many different learning stations.