CTRP Package 4 to deepen capital markets, says DOF

THE fourth package of the Comprehensive Tax Reform Program (CTRP) of the Duterte administration will deepen capital markets in the country and enlarge avenues for funding the massive infrastructure needs and key private-sector initiatives, a Department of Finance (DOF) official said.

Speaking at the Ways and Means Committee hearing at the House of Representatives on Tuesday, DOF Undersecretary Karl Kendrick T. Chua pointed out that Package 4 will collapse financial tax rates from the current 80 to at least 41, and repeal 32 out of the 41 special laws that have been granting special rates and exemptions.

“Package 4 is really about harmonizing 80 rates in the financial and capital system and by doing so, deepening the financial or capital markets in the country, so that we can leverage this to fund the massive infrastructure needs and also the programs of the private sector,” Chua said.

In line with capital income taxes, Chua explained that the rates diverge widely because of different issuers, currencies, instruments and  maturity, among others. The proposal is to keep it at a single rate of 15 percent.

A rationalization of the gross receipt tax of the banking system is also proposed at a flat 5 percent instead of 0, 1, 5, or 7 percent, aimed to make bank transactions easier.

The documentary stamp tax rate is also being eyed for a reduction, a move seen to benefit the nonlife insurance industry, among others, by promoting more insurance as the country faces more disasters.

“We propose to repeal some of the 32 out of the 41 special laws that have been granting special rates and exemptions. In the end, we hope to reduce all the rates from 80 to just 41 [rates] so that we can have a system that is more simpler, fairer and more efficient,” Chua told legislators.

The DOF official stressed that Package 4 of the CTRP is being crafted to be mainly revenue-neutral.

“By adjusting some of the taxes, some instruments will be higher, such as dividends from 10 to 15 percent, but there are also many instruments, such as debt securities, time deposits and savings accounts, that will see a lower rate from 20 to 15 percent,” he said.

House Ways and Means Committee Chairman Estrellita B. Suansing approved the motion for the creation of a technical working group to further simplify the proposed measure on capital income taxation.

When asked about the plan of the House of Representatives on Package 4 of the CTRP, House Speaker Gloria Macapagal-Arroyo reiterated that the committee will do its job and legislate.

“That’s our plan, to legislate. Our agenda is to carry out the agenda of President Duterte, so he has his 15 measures that he enumerated in the Sona [State of the Nation Address]. We already passed 11 of them,” Arroyo said.

At the sidelines of the committee hearing, Arroyo pointed out that rumors on her being appointed as finance secretary is “so hypothetical.” On the other hand, Finance Secretary Carlos G. Dominguez III also dispelled rumors that he will be appointed as Executive Secretary, telling reporters in a text message, “I’m not qualified.”

 

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