TRAIN AND THE POOR

When the Department of Transportation implements the jeepney modernization program, passenger utility vehicles 15 years and above will be phased out. The program has also been getting the support of the business sector.
CDN FILE PHOTO

Cebu economist: Train Law will not benefit the poor

Daisy, 21, works for a mall in Cebu City with a minimum daily wage of P366 or P8,064 monthly salary for working 24 days in a month.

The eldest among four children, Daisy grew up in the southern Cebu town of Dalaguete. She graduated in high school at 18 years old and came to Cebu City three years ago armed with the determination to land a job so she can provide medicines to her sick mother and send her three younger siblings to school.

She rents a room for P800 a month in Barangay Tejero in Cebu City and rides a jeepney to work at P7 one way or P14 for round-trip fare.

With the announcement of the Cebu Integrated Transport Service Cooperative (Citrasco) to ask for P6 increase on top of the current P6.50 minimum fare for public utility jeepneys (PUJs), Daisy’s fare rate will now increase to P12.50 one way or P25 for round-trip fare if the planned fare increase proposal will be approved.

The plan to file a petition for a fare increase is in response to the implementation of the Tax Reform for Acceleration and Inclusion (Train) Law, which is seen to generate P130 billion in revenues to fund numerous infrastructure projects and other programs of the Duterte administration.

But Cebu-based economist Fernando “Perry” Fajardo said higher transportation rate is only one of the many disadvantages of the Train Law.

In general, he said, it will not benefit the poor.

He said 50 percent of the country’s labor source are in the informal sector, and do not even file income tax returns.

Fajardo cited examples of people belonging to the informal sector which include the PUJ drivers and conductors, sidewalk vendors, and self-employed people.

“The tax exemption or reduction will have very little impact on this people. These are people earning minimum wage or even below the minimum wage. But then they will be punished in terms of price increases with all other products marketed and sold as a result of the Train Law,” he told Cebu Daily News in a phone interview.

Wage increase

Fajardo, an economist of more than 40 years, said workers like Daisy will be slapped with higher transportation rates because of fuel price increase and yet they will have very little salary increase year-on-year.

“The workers will demand for a wage increase but the business sector will not give in to their demands. The increase will just be equivalent to the inflation rate,” said Fajardo, a former assistant regional director of National Economic Development Authority (Neda-7) in Central Visayas.

In a text message, Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP) Chairperson Alan Tanjusay said they are currently observing the effects of the Train Law on the prices of goods and services.

If there is extraordinary rise in prices, he said they will file a petition for across-the-board wage increase to all wage boards nationwide.

“There will be significant increase in electricity prices. It’s a cause of grave concern for us because costs will be passed on to consumers,” said Tanjusay.

The 2015 Family Income and Expenditure Survey (FIES) of the Philippine Statistics Authority (PSA) showed that the average annual family income of Filipino families in Central Visayas was approximately P239,000, lower than the average annual family income in the whole Philippines at P267,000.

While the average annual family income in the Philippines is below 250,000 which is now tax-free under the Train Law, Fajardo said this will not benefit the poor at all.

Based on the PSA website, the FIES is undertaken every three years and is aimed at providing data on family income and expenditure, including, among others, levels of consumption by item of expenditure, sources of income in cash, and related information affecting income and expenditure levels and patterns in the Philippines.

Fajardo said they were grouped and ranked into per capita income deciles.

The richest decile or a group represents families belonging to the highest 10 percent in terms of per capita income, while the poorest decile represents families in the lowest 10 percent.

Based on the FIES results in Central Visayas, the bottom 10 percent or first decile has an average annual family income of P67,000 but their expenditure is at P86,000.

The second decile’s average income is P95,000 while the expenditure is P109,000. The third decile income is P123,000 while expenditure is at P127,000.

It is only on the fourth to 10th decile that income is higher than expenditure.

Fajardo said the difference between income and expenditure in the first and third deciles is already negative, which results to most families incurring debts.

“That is why the poor are buried in debt. You add the Train Law, they are in much poorer state,” he said.

According to the PSA data, 1.7 million families were surveyed for the FIES.

Questionable

Fajardo also questioned the effectivity of the Train Law in raising the estimated P130 billion worth of revenues to fund infrastructure projects.

“I do not support the Train Law. I think there is not much study about the matter. How much will they get from the tax reduction? How much will they get from the excise taxes? How much money are they giving to policemen for the war on drugs?” he said.

Fajardo said people can do away with sweetened beverages because these are wants, but they will suffer from higher transportation fares because of higher fuel prices.

“In the end, the poor will not benefit from this. It will still be the rich who will gain from this law,” said Fajardo.

Fajardo said there is a need to look at existing laws and correct the loopholes rather than creating more laws to raise government revenues.
Fajardo said it is best to increase the taxes on wealth, inheritance and property because these are owned by the rich people.