EXEMPTION OF P250K FROM INCOME TAX IS THE BEST SHIELD OF THE MIDDLE CLASS VS. TRAIN TAX HIKES
Exempting the first P250,000 of the income of individual taxpayers is the most effective shock absorber of Filipino families, especially those in the middle class, against the price increases resulting from tax hikes in the TRAIN tax reform law.
Note also that already factoring the impact of TRAIN, the inflation forecast of the DBCC for 2018 to 2020 is 3 percent plus or minus 1 percentage point. The DBCC is the government’s Development Budget Coordinating Committee. For 2018, the Bangko Sentral forecast is 3.4 percent.
There are fear mongers out there who continue to paint the TRAIN Law as bad for Filipinos, when it is not. TRAIN is one of the most historic tax laws of the country. It corrects the gross injustice the old income tax system has been inflicting upon the middle class and the poor since the 1990s.
The second TRAIN is coming soon according to Finance Secretary Sonny Dominguez. I, for one, look forward to seeing the details of the second tax reform package. I look forward to working with President Duterte’s economic advisers on arriving at the right mix for the people and the economy.
When individual income tax payers start receiving their salaries in January, the fear mongers’ protestations of gloom and doom will fall on deaf ears. When the poor get their tax reform cash transfer subsidies, the fear mongers will encounter deafer ears. When college students enroll in SUCs, deafer ears. Soon enough, the fear mongers will only have each other to talk with.
I now take this opportunity to offer some advice to salary earners, the self-employed, and small-scale entrepreneurs on how their personal disposable income can be put to good use.
Remember all those times before when you or your loved ones got sick or you needed cash for tuition and you wished you had some extra cash stashed away? Now would be the time to open an extra savings account to which you will transfer some or all of the extra cash because of TRAIN.
Another way to save for those emergencies is to purchase a pre-need medical plan for ER, diagnostic exams, and hospitalization.
Savings can also be used for buying assets that will earn additional net income for the family, but before embarking on that please compute all the costs, risks, and conservatively estimate for possible future income.
The very last thing you should spend that extra cash on is impulse buying, purchasing a “want” item instead of a “need”, or any other expense that does not come with a future benefit. (END)
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