Dumping TRAIN ‘will do more harm than good’

DAVAO CITY (MindaNews/ 26 July) – Junking the Tax Reform for Acceleration and Inclusion (TRAIN) law will deny the government of resources for projects and services, Education Secretary Leonor Briones said on Wednesday.

Trade Secretary Ramon Lopez monitors prices of basic commodities at a mall in Davao City on January 12, 2018. MindaNews photo by ANTONIO L. COLINA IV

“Again my perspective is that both as a citizen, as a professor of public finance and Secretary of the Department of Education, I believe that suspending a revenue-generator like TRAIN will do more harm that good,” she said.

Various groups have called for the abolition of the tax measure, blaming it as the primary cause of inflation that has reached record levels the past months.

But Briones said inflation becomes worrisome only if the country experiences an economic crisis.

“It is generally accepted that inflation becomes worrisome—you worry about inflation when an economy is spiraling into crisis. And this happened in earlier administrations,” Briones, a former professor in public finance told an economic briefing on Wednesday.

The secretary has held different positions in government such as presidential adviser for social development and head of the Bureau of Treasury. She was professor emeritus at the University of the Philippines in Diliman.

She cited that the country enjoys a strong gross domestic product (GDP) as affirmed by major international rating agencies such as Moody’s, Fitch, and S&P, and recognized even by both critics and defenders of the Duterte administration.

She maintained the implementation of TRAIN Law has improved the country’s economic performance despite the 5.2% inflation rate last month.

She said her department would be a major beneficiary of its implementation with a budget of P570 billion of the proposed P3.5-trillion 2019 budget for salaries and construction of more school buildings.

She said TRAIN should not be blamed for the inflation because external factors such as the world prices of oil and movements in the exchange rates have also caused increases in the prices of goods.

“We are very dependent on oil. When the exchange rate moves even by a peso or two, then the impact as I said, on the economy is very powerful,” she said.

Delays in the rice importation affected the prices of volatile food items, she said.

She said TRAIN would give government financial resources to address demands like free college education, infrastructures, employment and assistance for the poor who suffer from inflation.

Briones said the government could not cut down on expenditures amid the growing expectation from the public for more government services and increasing population.

“So reducing expenditures as far as any sensible person will think is out of the question. You can do it with your personal budget but not necessarily with the budget of the government because you cannot help but have increasing expenditures,” she said.

She said the country could not just rely on loans to support government projects because of their limitations.

Briones added another alternative is raising the county’s income through taxation by dividing “the burden with those who are getting more, contributing more and those who are getting less benefiting from such increases in expenditures.”

“So debt is also out of the question because there is a limit to borrowing. So where does that leave us? No to the crisis and expenditure, no to borrowing – that leaves us with raising ourselves, growing by our own bootstraps,” she said.

She said the negative attitude towards taxes “has to change because taxes now will pay for the education of our children, taxes will pay for the bridges that will allow the children to cross rivers without swimming across them to go to school.”

“Taxes will build hospitals. Taxes will perhaps help create jobs as in the case of the graduates of our technical/vocational program, who even before they graduated because they were already trained to work, already had jobs,” she said. (Antonio L. Colina IV/MindaNews)