The Tax Reform for Acceleration and Inclusion Act (TRAIN) is expected to be passed by the Senate in October and then signed into law by the President before Christmas. Senate Bill 1592, the Senate’s version of the proposed bill, is expected to raise the government’s revenue by P134 billion. This as the Bureau of Treasury reported a fiscal surplus of P28.8 billion for the month of August in 2017, due to stronger tax-collection measures.
One of the provisions in the said bill is the tax exemption to be granted on the first P150,000 annual taxable income, and the first P82,000 in 13th month pay and other bonuses. Needless to say, many taxpayers are waiting for the approval of the bill because of these popular components. Those who have up to four dependents will also enjoy an additional P100,000 exemption in their annual taxable income, pushing their possible tax exemption to P250,000.
As for entrepreneurs, TRAIN will raise the value-added tax (VAT) threshold to P3 million, from the current P1.9 million. Everything is seemingly advantageous, but not until one looks at the other provisions, specifically those referring to additional excise taxes on fuel, automobile and sugar-sweetened beverages (SSBs). Essentially, the losers are the consumers of certain oil products, buyers of vehicles and consumers of the SSBs.
Additionally, individuals receiving interests from their bank deposits and royalties will also be affected, as a final tax rate of 20 percent will be imposed on the amount of interest from any currency bank deposit and income from other monetary benefit from deposit substitutes, trust funds and other similar arrangements. Royalties will be taxed an additional 10 percent, except royalties for books, literary works and musical compositions.
VAT exemption for apartment or house-rental fees below P10,000 will be removed. An additional 12 percent will be added to the fees. Lotto winners will likewise shoulder additional taxes—20 percent on lotto winnings, except if the prize is P10,000 or less.
Finance Secretary Carlos G. Dominguez III said in a statement, “We hope the Senate will pass the TRAIN on third reading before going into recess in mid-October, the bicameral conference to conclude in November, and the President to sign the bill into law by December 15. This schedule will allow us to implement the tax reform on January 1, 2018, so that the benefits of the reform can be felt at the soonest possible time.”
There are those who argue that TRAIN will do more harm than good, especially for the poor Filipinos. I certainly hope our senators could look into the details of the bill more closely to see where it can be amended, in consideration of the welfare of the greater number of Filipinos.