The document discusses minimum wages, taxes, and the Tax Reform for Acceleration and Inclusion (TRAIN) law in the Philippines. It provides background on minimum wage rates and history in the country. It also outlines different types of taxes and compulsory contributions. The TRAIN law aims to increase revenues to fund education, healthcare, and infrastructure programs, but some have concerns it will raise fuel and consumer prices and increase poverty.

1. Applied Economics
General Academic Strand | Accountancy, Business, and Management
Lesson 4.2
Minimum Wages and Taxes
Concerns of Filipino
Entrepreneurs

2. There was a new law that was
implemented to enhance the tax
system in the Philippines called
the Tax Reform for Acceleration
and Inclusion (TRAIN) or
Republic Act No. 10963.
2
2

3. The law raises the
minimum taxable
income that helps a lot
of working-class
Filipinos to save more.
3

4. In order to sufficiently collect
funds for its projects and services,
the government needs to impose
higher taxes on goods and
services.
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5. Learning
Objectives
5
● Discuss the changes to minimum wage
rates over time and its effect on workers.
● Discuss the benefits and concerns of the
country’s current tax system.

6. Let’s
Connect
1. List down in a table the positive and negative
effects of TRAIN law.
Give Me Your Opinion!
6

7. Let’s
Connect
Give me your opinion!
7
Possitive Negative

8. Let’s
Connect
1. Do you think the TRAIN law is generally
beneficial? Why or why not?
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9. Essential
Question
9
What is the importance of minimum wage to
regular Filipino workers?

10. 10
Minimum Wage
Minimum wage is the
minimum amount of
compensation that an
employer is required to
pay its workers for work
performed within a
particular time.

11. 11
Minimum Wage
● Minimum wages are intended to protect employees
from unreasonably small wages.
● The minimum salaries can be fixed by a law, through a
regulation of a responsible body, by a wage
commission, by a salary committee, by labor court, or
by a tribunal.

12. Minimum Wage
History of Minimum Wage in the Philippines
● Letter of Instructions No. 174, s.1974 (Presidential
Decree No. 390)
● All employers from the private sector, including non-
profit institutions and organizations, are urged to grant
monthly emergency allowances to their employees.
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13. Minimum Wage
History of Minimum Wage in the Philippines
● Republic Act No. 6727
● Support the establishment of minimum wages and
encourage productivity improvement
13

14. Minimum Wage
History of Minimum Wage in the Philippines
● Republic Act No. 6727
● Through this law, the National Wages and Productivity
Commission (NWPC) and the Regional Tripartite Wages
and Productivity Boards (RTWPBS) were established.
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15. Minimum Wage
National Wages and
Productivity
Commission (NWPC)
Advise the President and
Congress on salaries,
profits, and growth.
Regional Tripartite
Wages and Productivity
Boards
Decide by province and
sector, the minimum wage
rates applicable to the
country.
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16. 16
Minimum Wage
Criteria for Minimum Wage Fixing
● The demand for living wages
● The way of living and changes or increases
● The needs of workers and their families
● Improvements in standard way of living

17. 17
Minimum Wage
Wage Rationalization Act (RA 6727)
States that there
should be different
minimum wage rates
per region for
agricultural and non-
agricultural workers.

18. 18
Problems in Different Minimum Wage Rates
Migration to Urban Areas
● High minimum wage rates in urban areas can create an
influx of job seekers from neighboring cities who are
seeking opportunities to have a higher paying job.
● This creates crowding in cities, leaving fewer people in
other small towns.

19. 19
Problems in Different Minimum Wage Rates
Fewer Businesses in Other Regions
● A higher minimum wage rate attracts not only job
seekers but also business owners.
● Big businesses would rather be located in a big city
where many people are working and earning than be
in other regional municipalities with fewer people.

20. 20
Taxes
Taxes are compulsory
charges by the
government to fund its
different operations.
These are levied or
impose on individuals,
companies, and the goods
people consume.

21. Types of Taxes
Capital Gains Tax
● Tax levied on earnings that
the purchaser gained from
their assets.
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22. Types of Taxes
Documentary Stamp Tax
Tax on papers,
instruments, loan
agreements, and
documentation showing
the approval, assignment,
settlement, or change of a
contract or right.
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23. Types of Taxes
Donor’s Tax
Tax on a donation or gift and is
imposed on the free transfer of
property between two or more
persons living at the time of the
transfer.
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24. Types of Taxes
Estate Tax
Tax on the right of a deceased
person to transfer their estate
at the time of death to their
rightful heirs and recipients
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25. Types of Taxes
Income Tax
● Tax on personal income
● Usually imposed to employees and entities and is
based on respective profit or income
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26. Types of Taxes
Percentage Tax
Corporate tax levied on individuals
or companies selling or leasing
goods, property, or services in the
context of a transaction whose
total annual profits or receipts are
not more than ₱550,000.
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27. Types of Taxes
Value-Added Tax
A sales tax levied on the
consumption of the sale of
goods, services, properties,
and imported goods.
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28. Types of Taxes
Excise Tax
● Tax levied on the production, distribution, or use of a
good in a country
● Goods that are manufactured or produced for
domestic sale, use, or imports
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29. TRAIN Law
Comprehensive Tax Reform Program (TRAIN Law)
● RA 10963 or Tax Reform for Acceleration and Inclusion
(TRAIN)
● Revision towards a faster, fairer, and more effective
taxation system
● Seeks to increase revenues to support the
government's programs and finance investments
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30. Benefits of TRAIN Law
Education
● The government aims to create a more conducive
learning environment that will implement the ideal
teacher-to-student ratio.
● In the next 5 years, taxes can fund 629,120 public
school classrooms or 2,685,101 public school teachers.
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31. Benefits of TRAIN Law
Healthcare Services
The tax reform aims to build 60,483
rural health units, 484,326 barangay
health stations, or 1,324 provincial
hospitals that are essential to the
improvement of the Philippine
healthcare system.
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32. Benefits of TRAIN Law
Infrastructure Programs
The government’s current
infrastructure programs target
the creation of major highways,
expressways, and flood control
projects in the next five years.
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33. Concerns under the TRAIN Law
Increase in Fuel Prices
● Transportation and logistics businesses may suffer
from high fuel prices.
● These increased costs will be passed onto consumers
through their goods and services.
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34. Concerns under the TRAIN Law
Increased Costs in Labor Transitions
● The shock experienced by some businesses will direct
workers from working in the industries to agriculture.
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35. Concerns under the TRAIN Law
Increased Poverty Rate
There will be an increase in
poverty among households
because the price increase in
commodities will offset the rise
in income.
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36. Taxes
Tax Computation
Taxable income = Monthly basic pay – (SSS/GSIS +
PhilHealth + Pag-IBIG + other deductions)
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37. 37
Compulsory Contributions in the Philippines
Social Security System (SSS)
It is a government-run social
institution that caters to
private, professional, and
informal sectors.

38. 38
Compulsory Contributions in the Philippines
Government Service
Insurance System (GSIS)
It is a government-run social
institution that caters to the public
sector, including government
employees and uniformed
personnel.

39. 39
Compulsory Contributions in the Philippines
PhilHealth
It is a government-controlled
corporation that seeks to
provide universal health care
in the Philippines.

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Compulsory Contributions in the Philippines
Pag-IBIG
It is a state-run social
institution that provides
affordable housing and loan
schemes for Filipinos.

41. Wrap-Up
41
● Minimum wages are characterized as the
minimum amount of compensation required by
an employer to pay wage earners for work
performed within a particular time, and cannot
be decreased by a negotiated agreement or by
an individual contract.

42. Wrap-Up
42
● Taxes are involuntary charges imposed on
individuals or companies and imposed by a
government agency to fund government
operations, whether local, regional or national.
● The goal of the Tax Reform for Acceleration and
Inclusion (TRAIN) is to make the Philippine Tax
System faster, fairer, and more effective in
encouraging employment, generating employment,
and decreasing poverty.

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Challenge
Yourself
Which groups will suffer if the minimum wage
is uniform? Why?

44. 44