What is TRAIN?

Tax Reform for Acceleration and Inclusion

The goal of the first package of the Comprehensive Tax Reform Program (CTRP) or TRAIN is to create a simpler, fair, and more efficient system, as per the constitution, where the rich will have a bigger contribution and the poor will benefit more from the government’s programs and services.

Increasing the Excise Tax of Automobiles

TRAIN simplifies the excise tax on automobiles, but lower-priced cars continue to be taxed at lower rates while more expensive cars are taxed at higher rates. This excise will raise revenue in a very progressive manner as the richer buyers tend to own more and expensive cars compared to those who earn less.

When we consider the TRAIN as a package, the increase in take home pay from the personal income tax reduction will be more than enough to offset the increase in prices resulting from adjustments in excise taxes. For example, those who will purchase a Vios will be able to save P16,122 despite the increases in taxes, and those who buy an Innova will save around P29,923 even if they buy a car with the new rates. For a Vios, this translates to only an additional P183 in monthly amortization assuming a standard loan term of five years. This implies that for a typical buyer, the additional take home pay from the PIT reform will more than fully offset the increase in amortization.