The Implications of Train Law to the Life of Juan Dela Cruz

OBSERVATION

The Tax Reform for Acceleration and Inclusion (TRAIN) Law, introduced in 2017 during the Duterte administration, was presented as a progressive reform aimed at reshaping the country's tax system. It included adjustments such as lower income tax for individuals in low- and middle-income brackets, alongside expanded VAT coverage and increased excise taxes on products like fuel, sugary drinks, tobacco, and vehicles. The law was framed as a way to create a more equitable and efficient tax structure, while also helping to raise funds for government programs in infrastructure, health, and education.

Initially, many Filipinos appreciated the tax cuts, especially salaried workers who saw a noticeable rise in their take-home pay. It appeared to be a positive step toward improving economic well-being and consumer spending. However, the broader and longer-lasting consequences became apparent over time. Prices of transportation, essential goods, and other services began to rise due to the excise taxes. As inflation followed, many families found themselves paying more for their daily needs. The modest increase in income was quickly overshadowed by the growing cost of living—leaving low-income households no better off, and in some cases, even worse than before.

INSIGHT

Although the TRAIN Law had promising goals, its unintended effects on the public, especially those in the lower-income and informal sectors, raised significant concerns. While formal employees gained some relief through reduced tax deductions, other Filipinos—such as daily wage earners, street vendors, and small business owners—were largely left out of this benefit. At the same time, they were heavily affected by rising expenses. From higher fuel prices impacting commute costs, to increased prices in markets and stores, the financial strain was felt across multiple aspects of daily life.

What this reveals is that tax reforms cannot be one-dimensional. Focusing solely on income tax without fully considering the broader implications of consumption-based taxes can create an uneven playing field. The law may have aimed to be fair, but its design unintentionally placed a heavier burden on those least capable of absorbing the additional costs. As the government tries to manage the country's growing debt—now exceeding ₱16 trillion—ordinary citizens (infants inlcuded) end up carrying the weight through daily expenses, while wealthier sectors remain relatively insulated from the fallout.

LEARNING

The experience of the TRAIN Law highlights the importance of designing reforms that consider both immediate and ripple effects on society. Policymaking should go beyond projections and anticipated outcomes; it must be grounded in how policies will affect people’s day-to-day realities. While the goal of increasing disposable income was met for some, the resulting inflation and cost hikes neutralized those gains for many others especially the poor, who were never the main beneficiaries of the tax cuts in the first place.

The situation reflects a deeper contradiction in our system: lowering taxes sounds like a clear win for the people, but if it's paired with price hikes that outweigh the benefits, then the reform fails to serve its purpose. Meanwhile, higher-income earners and large businesses often remain shielded from the consequences. For a country already grappling with debt and inequality, this creates a recurring cycle where the same vulnerable groups are repeatedly hit the hardest.

In the end, every effort to improve the system should aim to ease the burden of the ordinary Filipino—our Juan Dela Cruz—whose life is most affected by every shift in policy.