Proposed tax reform bill won’t stop smuggling, small traders say

House Bill 5636, or the proposed Tax Reform for Acceleration and Inclusion (TRAIN) act, certified by President Rodrigo Duterte as urgent, has been criticized anew by businessmen, claiming it is one measure that the government will rely on for the delivery of services which are already affected by smuggling.

Citing a recent study by the University of Asia and the Pacific Center for Research and Communication Foundation, Inc. and the Federation of Philippine Industries (FPI), the businessmen said the study showed that the Philippines has lost billions of pesos due to smuggling of products from just eight industries in a span of five years.

From 2011 to 2015, the study reported that government has lost an estimated P111 billion in revenues from the smuggling of petroleum, steel, resins, wood, cigarettes, sugar, palm oil, and automotive batteries worth more than P904 billion.

Aside from the revenue loss, smuggling has also lowered gross domestic product by P495.5 billion, household income by P77.2 billion, and displaced 291,070 workers in the above-mentioned industries within the five-year period.

With this, the Philippine Association of Stores and Carinderia Owners (PASCO) claimed that the proposed TRAIN will not minimize or stop revenue loss due to smuggling.

The group added that smuggling even affects the delivery of basic services as the government relies on tax collection, such as TRAIN, to finance its various infrastructure and social development programs nationwide.

The TRAIN bill is the government’s proposed tax-reform package which lowers personal income tax rates and expands the VAT base by imposing excise taxes on commodities such as sugar-sweetened beverages and petroleum products.

A number of business sectors, including small sari-sari store owners, have opposed the TRAIN bill for being “anti-poor” as it is expected to increase prices of beverage products commonly sold in community stores. Marilyn Montano