The House of Representatives is expected to approve on final reading the Duterte administration’s first tax-reform package by the end of the month, especially with the Department of Finance (DOF) now working to have the bill certified as urgent by Malacañang.
The government’s worry now, however, is that establishments could use the bill’s imminent passage to jack up their prices this early.
The Tax Reform for Acceleration and Inclusion (TRAIN), which seeks to lower personal income-tax (PIT) rates, expand the value-added tax base, adjust excise taxes on petroleum and automobiles and ease the rates of estate and donor’s taxes, is now a step closer to becoming a law, as the House Committee on Ways and Means approved its substitute bill on Monday. In an interview after the approval of the still unnumbered substitute bill at the committee level, PDP-Laban Rep. Dakila Carlo E. Cua of Quirino, chairman of the panel, said his committee was to submit on Monday the panel report on the tax-reform package to the House Committee on Rules for plenary consideration.
According to Cua, declaring the tax-reform package as an urgent measure would ensure its immediate approval at the lower chamber. “The DOF is already working on that [certification of the bill as urgent],” he said.
But even without the certification of urgency, Cua said the lower chamber could still pass it on third and final reading before Congress goes on sine die adjournment on May 31. Under the bill, workers earning P250,000 will be exempted from paying PIT.
The bill also includes a P6 per liter levy on petroleum products and ad valorem tax on brand new automobiles that could cause prices of basic goods to significantly rise.
The P6 per liter excise tax increase is divided into three tranches: P3 in the first year, P2 in the second year and P1 in the third year.
The package also includes the relaxation of the Bank Secrecy Act, as well as the imposition of taxes on Philippine Charity Sweepstakes numbers’ game and lotto winnings.
The panel has also adopted new schedules and brackets for auto excise taxes in the package. The DOF is pushing for the excise tax on vehicles to address traffic in the country.
Under the proposal, the revised excise taxes will be implemented in two schedules. For the lower bracket, if the net manufacturer’s price/importer’s selling price is P600,000, the excise tax will be 3 percent by 2018 then increase to 4 percent by 2019.
For the higher bracket, If the net manufacturer’s price/importer’s selling price is over P3.1, the excise tax will be P1,468,000 plus 90 percent of the value in excess of P3.1 million in 2018. For 2019 , if the net manufacturer’s price/importer’s selling price is over P3.1, the excise tax will be P1,824,000 plus 120 percent of the value in excess of P3.1 million.
The panel has also included in the TRAIN an excise tax on sugar-sweetened beverages (SSB) and carbonated drinks through P10 per liter of volume capacity, with 4-percent increase every year. Under the bill, 50 percent of the tax collection from the P10 per liter excise tax on SSB shall accrue to the General Fund.
As to the remaining 50 percent of the tax collection from the SSB excise tax, the committee adopted the DOF proposal, as manifested by Finance Undersecretary Karl Kendrick T. Chua, that 85 percent of the proceeds will be allocated to priority programs for national government, while the remaining 15 percent will be for the benefit of the sugar farmers.
“This is only to specify what are the priority programs to be funded without mentioning the allocated percentages. This will allow the departments involved, the Department of Budget and Management [DBM] and Congress, to expound in the budget what these allocations should be after reconsidering the bigger picture. This would also allow the DBM’s flexibility in prioritizing the funds,” Chua said.
“There has been further progress in the first CTRP [Comprehensive Tax Reform Package] bill with its final approval by the Ways and Means Committee. We are hopeful that the House could pass this bill at the plenary level before the Legislature’s sine die adjournment on June 2. We also hope they will reconsider a number of provisions that were removed from the administration proposal,” Chua said.
The House Committee on Ways and Means gave its final approval at the start of Monday’s hearing after the bill was returned to it by the House appropriations panel, headed by Rep. Karlo Alexei B. Nograles. The substitute bill consolidated House Bill 4774 with 54 other tax-reform measures filed by other lawmakers.
“What we should be concerned about is the profiteering by businesses that will use tax reform as an excuse to unnecessarily increase prices. We are working closely with the Department of Trade and Industry to ensure that this will not happen,” he added. He urged lawmakers to view the CTRP as a package so it can truly realize its ultimate objective of benefiting 99 percent of Filipinos.
“Tax reform is really about investing in every Filipino’s future. We need tax reform because we want all Filipinos to rise above poverty and be prosperous by 2040. The business-as-usual scenario of just doing a little is no longer acceptable given our huge investment gaps,” Chua said.
With Rea Cu