Press Release
November 22, 2017


"No lower VAT, no TRAIN."

This was the statement issued today by Akbayan Senator Risa Hontiveros on Wednesday saying that she is amenable to supporting the proposed Tax Reform for Acceleration and Inclusion Act (TRAIN) as long as the measure lowers the Value Added Tax (VAT) from 12 to 10 percent.


"My bottom line is a TRAIN with a lowered VAT. While I support the push for a comprehensive tax reform package, this should primarily protect and benefit the poor, who for the longest time have been at the receiving end of a largely regressive tax system," Hontiveros said.

"Kung ibababa ang VAT, tataas ang suporta ng publiko sa TRAIN," Hontiveros added.

Hontiveros said that TRAIN should reduce the country's VAT from 12 percent to 10 percent, and then to 8 percent to align it with the Association of South East Asian Nations (ASEAN), once VAT revenues reach 4.5 percent of the country's Gross Domestic Product (GDP), which she said is what Thailand is able to collect with a 7 percent VAT rate.

"Lowered VAT to benefit 1.7 million wage earners"

The Senator explained that a lowered VAT is one of the safety nets she is pushing for to cushion the effects of TRAIN on 1.7 million "near poor" wage earners whom she said are in danger of becoming poorer once the law is passed and implemented. Hontiveros also said that the monthly transfers to the poor need to be made available for a longer period of time corresponding to the phased implementation of fuel excise tax increases.

Hontiveros said that using the Department of Finance's (DoF) own "micro-simulation methodology," while poverty will be marginally reduced as a result of the P200 per month income transfer as provided by TRAIN, 1,796,730 near poor wage earners will also become even poorer.

"Due to the said households' families' bigger size compared to the DoF's assumed typical household size in its computations or even compared to its sample of five (5) thousand households in each income grade, and because the National Housing Targeting System (NHTS) methodology is unable to identify 13 percent of the poor, millions of near poor people risk becoming poorer," Hontiveros said.

Tobacco tax in TRAIN will generate additional P 50 B, reduce 1.5 M smokers

Meanwhile, Hontiveros, who is the Vice-Chair of the Senate Committee on Health and Demography, wants to include additional excise taxes on tobacco products in the TRAIN by doubling tobacco taxes, with an annual rate increase of 10 percent in the succeeding years. She said that additional tobacco taxation in the TRAIN will generate an additional P 50 Billion worth of revenues and reduce the number of smokers in the country by more than 1.5 million.

"The proposal to include additional tobacco taxation in the TRAIN will hit two birds with one stone. It will generate the government billions of Pesos of needed revenues and prevent the prevalence of many life-threatening illnesses caused by smoking, which include lung cancer, stroke, coronary heart disease, chronic Bronchitis and other lung diseases," Hontiveros said.

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