Train Package 1 a Step toward Good Fiscal Policy

Posted by AsiaViews | Dec 26, 2017 | 0 |

The Manila Times

20 Dec 2017

PRESIDENT Rodrigo Duterte finally signed into law on Tuesday the first package of his government’s proposed tax reform measures under the Tax Reform for Acceleration and Inclusion (Train) plan. Overall, it is a step toward good fiscal policy, despite some last-minute criticisms before the signing of the bill.

The criticisms centered on the tax exemption given to locally produced coal, which will benefit Semirara Mining of the Consunji group, practically the only domestic source of coal; and the restructuring of excise taxes on motor vehicles.

The intense lobbying directed at the Office of the President to veto some of Train’s provisions was palpable, with opinion columnists and radio anchors suddenly becoming tax experts overnight.

It was indicative of how significant the impact of these changes would be on the affected parties, as is expected of any piece of reform legislation.

Critics, however, should keep in mind the original goal of Train Package 1 – to relieve the working class of some of the highest personal income tax rates in the region.

The passage of Republic Act 10963 simply means bigger paychecks for employees, which will certainly boost consumption and create multiplier effects on the economy.

For example, a minimum wage earner with a P12,000 monthly salary, or a clerk receiving a P15,000 salary per month, will now be tax-exempt, as is a call center agent who earns P21,000 monthly.

Moreover, a public hospital doctor earning P57,000 monthly and who used to pay P138,000 in taxes annually, will now pay only P90,000.

Small- and micro-entrepreneurs will benefit from a simplified tax rate of 8 percent on gross sales, which will be imposed in lieu of income and percentage taxes.

The donors’ tax, or tax on a donation or gift, has been reduced from up to 15 percent to a 6-percent fixed rate of net donations above P250,000 annually.

The dreaded estate tax has also been lowered from up to 20 percent to a fixed rate of 6 percent of the net estate, with a standard deduction of P5,000,000. This should allow families who have inherited property from their parents or grandparents to finally transfer the assets under their names, and benefit from these.

Since these changes will reduce the tax base, lawmakers have had to find other revenue sources to plug the gap – adjusted excise taxes on cars, sweetened beverages, fuel and others. The law also repealed 54 special laws that allowed non-essential VAT exemptions.

Train Package 1, therefore, effectively shifts taxation to consumption. Those who consume more will be taxed more.

The reduction in personal income taxes not only corrects a structural imbalance, it also gives individuals and families more freedom in terms of spending the fruits of their hard-earned labor.

These are the hallmarks of good fiscal policy.

(source: http://www.manilatimes.net/train-package-1-step-toward-good-fiscal-policy/369622/)

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EXTRICATING NDONESIAN CHILDREN FROM ISIS INFLUENCE ABROAD

Indonesia urgently needs to revisit the possibility of repatriating the neediest of its young citizens stranded abroad, whose families had earlier joined ISIS. Most of these children are in camps in northern Syria but there are also small numbers in the Philippines, Afghanistan and Iraq. “Extricating Indonesian Children from ISIS Influence Abroad”, the latest report from the Institute for Policy Analysis of Conflict (IPAC) argues that the government could begin by bringing back small groups of unaccompanied children under ten years of age, who pose minimal security risk and are most vulnerable to deteriorating conditions in the camps.“The problem is that health and security conditions are worsening by the day in the Syrian camps, and the children are growing older,” says Dyah Kartika, IPAC analyst. “They need access to schools, a nurturing environment, and medical attention. If the government waits too long, the children will be further exposed to ISIS ideology.” The new report examines a 2019 list of Indonesians in camps and prisons run by the Kurdish Syrian Democratic Forces (SDF). The Indonesian government has been trying to verify their citizenship, but with pseudonyms, misspellings and bad transliterations, it is a daunting task. At the time the data was collected, between March and June 2019, there were 555 Indonesians in SDF camps and prisons, including 367 children. Among the children, approximately 277 were under the age of ten and 34 were unaccompanied. In June 2021, there are fewer than ten children who are both unaccompanied and under the age of ten that could be prioritized for return. Bringing back children of ISIS families is no easy task. The report analyses the main challenges faced by the Indonesian government. These include definitional issues, bureaucratic competition, the difficulty of verifying nationality, evaluating the toll of exposure to conflict, assessing security risk, and finding relatives or others willing to provide care once the children are returned. In addition, COVID has meant stringent restrictions on travel, placing further obstacles in the way of repatriation. There are several models for rehabilitation of children exposed to violent extremism in Indonesia that could be modified to accommodate the needs of children repatriated from abroad. The report examines these models and argues that the government does not need to have every detail of rehabilitation programs in place before it starts extricating children from ISIS influence. It can start by bringing back the most vulnerable children and then modify programs as needed.

“It’s important that the government see these children as victims” says Dyah. “They deserve a chance to be children again.”

Train Package 1 a Step toward Good Fiscal Policy