Impact of the Train Law to Filipino Citizen

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There are a lot of factors that are affecting the prices of the commodities and necessities in the Philippines while before it used to fluctuate now the prices just seems to go higher and higher as 2018 entered as the inflation rate in the Philippines went higher which is not a good thing for the Filipinos and the Philippine economy, as we welcomed 2018 the government also passed the new law that is the TRAIN law.

In 19 December, 2017 signed the first package of the reformed program that is the center piece of the governments plan to be able to collect funds for the Duterte administrations infrastructures known as the Tax Reform for Acceleration and Inclusion (TRAIN) law Republic Act (RA) 10963, this law program is expected to be enacted to throw away the 20-year-old tax regime and make the countries taxation system simpler and fairer. The Duterte administration have this program called “Build, Build, Build” which aims to build more infrastructures, improve health care programs and education programs. The Train law is expected for its first year to generate $1. 8 billion revenues and 70% of this will go to its build, build, build program and other infrastructures such as military infrastructures, sports facilities, mass transportations, new road networks, portable drinking water supply in all public places and the other 30% will be for investments in education, health, targeted nutrition, social protection, employment, anti- hunger programs for young children, infants and mothers, employment and housing that will directly benefit both the poor and near-poor households. This is the simplified version of the new TRAIN law;The vision of the train law is to let the Personal Income of a average Filipino Citizen take home most of its salary and to increase revenues for financing for the infrastructures, healthcare and education.

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As the economist always says “ there is no free lunch” applies as well in this law because anything that is valued as reduction by the TRAIN law actually refers to an opportunity cost to be added to the other commodities and necessities in the country such as adding the taxation in the prices of the fuel, sugar and sugary drinks, vehicles and coal which leads to the hiking of the price of the electricity. following;Weaker Pesoif the peso is weaker it means that the value of our money is low. Importation of goods and imported goods would be more expensive and would cause a negative impact in our country. We import oil and we use it for transportational and agricultural use and that means if the peso is weak everything that is being imported, transported or simply everything that needs fuel to be produced would have higher price because of the weaker peso. OFW’s may think that they are receiving more peso, but their purchasing power is low due to the inflation Gasoline PricesWeaker peso is interrelated to the hiking price of Gasoline because Philippines imports gasoline and weaker peso would make gasoline more expensive If Gasoline Prices goes up then it doesn’t only mean transpiration cost will go up but as well as the goods in the market because of the transportation cost of the goods and it also affects the price of its production just like how it affects Filipino fisherman who requires fuel to for their boats to sail and be able to catch fish which would cause the prices of the fish to be more expensive and if the local fish is more expensive then people would the imported fishes more as it is more cheaper and will lead to lower in demand of the local fish that would cause the Filipino Fishermen a loss or decline in demand.

Electricity Prices

There is an excise tax on coal, under the TRAIN law it is approved to have Php 50 per metric ton of tax in 2018 and this means increase of centavos per kwh for Meralco which is the only electricity provider in the Philippines. If the electricity will have an increase in price means that everything that Filipino Citizen will have to pay more than what they used to pay because their household electricity provider is Meralco unless they have their different electricity provider. If electricity price increased it means that everything that is being manufactured that needs electricity to produce will have higher price which is almost everything in the market and will lead to households purchase power be low.

Rice crisis

Philippines used to export rice and now we import rice, Due the price hike of the electricity and gasoline in the Philippines it would make the price of the local Rice more expensive and that would lead to importation of rice and due to weakened peso it would be costly as well to import rice which is one of the basic necessity and daily need of a Filipino citizen. Other inflation;Vegetables inflated by 19. 2%, corn 12. 6%, fish 12. 4%, and sugary goods 9. 1%Inflation rateIf the inflation rate is high, it can cause poor Filipinos to starve. It might not have a big impact in a middle class Filipino citizen but the poor citizen of the Philippines would really carry its weight. The inflation rate is the caused by the majority of the price increasing in the market. Inflation means you have to pay for the services and goods and this has interconnection with the prices of gasoline, electricity, coal, weakened peso, and crisis due to the Train law.

Cash Transfer

The Cash Transfer is a program by the Government under the TRAIN Law,The government allocated Php 25. 67 Billion to help the low income earners to cope up with the impact of the inflation due to the TRAIN Law. The first 10 million beneficiary households will be expected to be part of this program in where they will receive Php 200 monthly- (Php 2400 per year) and the next suceeding year Php 300 monthly – (Php 3600 per year) In this program Supply and Demand

Everything in the Economy is proven to be interconnected and related just like the effect of the Train Law in the Philippine economy. That if one price goes up vice versa, it is expected for the other prices to go up as well and most of this is caused by the train law. No matter how expensive the prices goes up the Filipino citizen needs to or are forced to pay the high prices that is being demanded. Rice is being consumed by a regular Filipino citizen because a regular Filipino eats rice twice or more than twice a day and with tat being said it means that it is always a demand in the market, the supply is being met but the price is not the ideal price.

The poor Filipinos are demanding a cheaper price of rice which is called NFA, and that is the type of rice that is having a shortage that cause the poor Filipino families to substitute their rice to bread. Gasoline is being consumed in the Philippines 460. 25 thousand barrels per day according to Knowma. com and that is expected as there is 830. 13 private cars only in the Philippines. The goods to be transported consumes gasoline so no matter how high the gasoline cartels put up their prices the government cant do anything about it and not only the train law has caused the prices to go up but it is one of the major cause and with that being said it is like the Train law added salt to the wound of our economy with the gasoline price.

The demand for the gasoline has to be always met because it set the economy in motion and it we will have a shortage it will affect everything in the economy just like how fresh veggies needs to be transported in the market as there is a demand if it wont be transported it will just cause a loss for the farmers as it will just be spoiled. Electricity in the Philippines has only one provider which is Meralco a household has its own electricity provider. If there is going to be a shortage in the energy it will cause delays in the business world and a rotational brown out. This is not good for the economy as everything is mostly computerized these days so it should always meet its demand. If not productions will be affected greatly and even though it is expensive it is a necessity to every Filipino. Inflation is can be due to the raising of the price of the production of the goods and more costly service payments. It is connected in the supply in demand because if there is inflation it means that people will buy less goods and avail less services means less demands that can cause the affected industry to have a loss or died down. If Philippine peso is weakened there is going to be firms, investors and households that will require peso to be supplied and demanded. If rates of return in a country look high, then that country will tend to attract funds from abroad. Vice versa, if rates of return in a country look low, then funds will tend to flee to other economies. Weakened peso causes the investors in the philippines to be discouraged. PEZA( Philippine Economic Zone Authority)

Interrelationship to Train LawPEZA is a concept by the government as a mechanism for foreign investments for foreign and multinational investers to invest and establish businesses in the Philippines. If there are going to be foreign investors in the country it will not only improve the business economy in the philppines but it also answers for the problem of lack of jobs in the country. Ph needs to attract foreign companies in the Philippines but with the Train law and the another coming package of Train law that is removing the benefits and incentives of the PEZA. The existing PEZA companies are very much affected and worried about the coming TRAIN Law 2. Foreign investors now are more reluctants to invest because TRAIN Law 2 will drastically change the countries excisting competitive incentives. The pending Trail Law 2 is till pending but there has been a decline already which is already affecting the economy already. So Train law really the right train or it is a Train wreck?There may be positive sides to the Train Law but they just put it in the other Taxable taxes. The train Laws goal is to lessen the poverty in the Philippines but right now it is just making the poor poorer due to the racing of the prices in the daily needs of a Filipino citizen. Yes, the government just raised passed the income taxes on the other necessities and commodities and to the ultra-rich but as everything is inter related in the economy it is causing almost everything to be expensive in the market. In my opinion, the Trail Law should be abolished because everyone in the country is experiencing the Inflation due to the Train Law and this is not okay. There may be different reasons that is why the prices of the necessities and commodities in the Philippines but it is the governments job to stabilize the prices but with the Train Law the government is doing the opposite. The government says that because personal income has lesser tax Filipino people should just spend wisely but who is really a better spender? The government or the Filipino people ? If all of the goods and services are all expensive the lessening of income taxation is nothing. There are a lot of corrupted officials in the government who are spending the money of the “taong bayan” that most Filipinos spend their blood, sweat and tears who are just spending it mindlessly.

The Philippine government should start to clean the government first and take out and overthrow all of the corrupt officials first because as long there are corrupt officials the money that Filipino citizens worked hard for will just go to their pockets. The government has been denying that the inflation is not due to Train Law but the Train Law comes with the Cash Transfer Program and with that it is like they are admitting the Train Law is really causing the inflation which it really is. What percentage is not slavery if stealing of the product of someone else’s labor is slavery?Over taxing is like modern day slavery. If the Filipino people can see where their money goes and if the heaviness of the Train Law isn’t this heavy for Filipino people then it would be better but right now it is doing more harm than good. Before the Train law the economy of the Philippines has been growing due to the foreign investors in our country. In my opinion foreign investors are really important and plays a vital role in our economy and the Philippine government should not remove the current incentives as it is one of road to a glowing economy.

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