THE Department of Finance (DOF) said its comprehensive tax-reform package is still on track with the government’s target of being able to implement package one by the third quarter of 2017, following President Duterte’s pronouncement of lowering tax rates.
Finance Secretary Carlos G. Dominguez III said the submission of package one of the tax-reform proposals to Congress last September, and its progression, are still on track with the government’s target date or projected implementation of the measure.
“It’s still on target. We did not expect it to be effective in January . In fact, if you look at the original plan, it will be either effective on July 1  or the first part of January 1, 2018. If you look at the original, we are still on track. I wish it would go faster, but this is the way legislatures move,” Dominguez said.
The first package of the DOF’s proposed Tax Reform for Acceleration and Inclusion Act was submitted to Congress on September 26 last year, with the main focus of the package being to lower personal income-tax (PIT) rates from 32 percent to 25 percent.
It also indicates a number of offsetting measures to help reduce revenue losses, namely, the expansion of the value-added tax (VAT) base by limiting exemptions to necessities and increasing excise taxes on fuel, oil products and automobiles.
The DOF’s tax-reform program includes a total of four tax-reform packages: the lowering corporate income-tax (CIT) rates, the rationalization of fiscal incentives, lowering the rates of estate and donor’s tax, and the reduction of the tax rates on interest income earned on peso deposit and investment from 20 percent to 10 percent, among others.
When asked if the DOF has reached out to the President to gain support for the proposed tax-reform measure, Dominguez said President Duterte is fully engaged on the matter.
“Yes, we had at least three meetings with the members of the legislature and President Duterte told them, he is fully engaged in it,” he said.
When the President gave his State of the Nation Address (Sona), he expounded on two key areas to work on mainly tax reform and the massive infrastructure buildup in the country.
The Duterte administration is set to reverse the underspending of the past administration by launching infrastructure projects under a “reimagined” Public-Private Partnership Program, while moves on tax reform will start from the lowering of PIT and CIT rates, Dominguez said in earlier reports.
To offset the projected drop in revenues as a result of the lowered income tax rates, Dominguez said the government would broaden the tax base, and reform the collections systems in revenue-generating agencies mainly the Bureau of Internal Revenue (BIR) and of Bureau of Customs (BOC), among others.