Are You in Favor of the Suspension of the Implementation of the T.R.A.I.N. Law?

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“Are you in favor of the suspension of the implementation of the T.R.A.I.N. Law?”

A Paper Presented to

The Commercial Law Department

Ramon V. Del Rosario - College of Business

De La Salle University - Manila

In Partial Fulfillment

Of the Course Requirements in

Law on Income, Transfer and Business Taxes

BUSLAW3

3rd Trimester, AY 2017 - 2018

Submitted by:

Cornejo, Nukita Frances S.

Lim, Patrick Louie S.

Reyes, Mariella Denise A.

Submitted to:

Atty. Voltaire Salud

Date:

August 16, 2018

Introduction

        The term taxation is used when the government, levies or imposes a mandatory charges on citizens and corporate entities. (1) This term applies to all the different types of involuntary levies. Through taxation governments are able to encourage or discourage economic decisions. Taxation applies to multiple different levies, these can include but are not limited to; Income tax, Corporate tax, Capital gains, Property tax, Inheritance and the like. The main purpose of taxation is to provide funds or property to promote the general welfare and protection of its citizens. Other objectives of taxation includes strengthening anemic enterprises, using tax as a bargaining tool, avoiding economic issues, reducing inequalities in wealth, to promote science, invention and the general welfare and incentives for certain activities to initiate investments.

This inherent power of the state is subject to constitutional and inherent limitations that will safeguard the public from abusive laws that may be enacted by the Congress. Under Article VI, Section 28 of the 1987 Constitution, the following limitations were set in order to preclude the Congress from making unjust legislations:

        The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation. The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government.
Charitable institutions, churches and personages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation.
No law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of the Congress.

        In general, the limitations on taxation encapsulated in the provision cited above in coordination with other constitutional provisions can be ascertained into four (4) points: (1) it should be for a public purpose, (2) it is a legislative prerogative, (3) it is jurisdictional, and lastly, (4) it must comply with international agreements or comity.

        To simply put it, The primary purpose of taxation is best described in the case of Commissioner of Internal Revenue vs. Algue where Justice Isagani wrote in the main decision that, “taxes are the lifeblood of the government…”. The secondary purpose, on the other hand, existes for purposes of regulation or control. For instance, secondary purposes of taxation may take the form of  follows the government campaigns supporting anemic enterprises by providing tax exemptions. It may also exist to protect reduce inequalities in  wealth and income by imposing progressively higher taxes. The imposition of tariffs on imported goods to protect local industries is another example of a secondary purpose.

What is the T.R.A.I.N. Law?

        TRAIN Law, which is abbreviated as the “Tax Reform for Acceleration and Inclusion”, or Republic Act 10963 mandates the following: (1) a progressive tax system for a sustainable and economic inclusive growth, (2) an equitable and taxable economic policy and finally, (3) for the government to exercise its jurisdiction over its citizens and for the welfare of its people. The main objective of TRAIN Law is to create a more just, simple, and more effective system of tax collection, as per the constitution. This is where the upper class would have a much bigger contribution than the lower class, where it would leave the lower class to benefit more from the programs and services of the government. It has been implemented on January 1, 2018 under the Duterte Administration.