THE Department of Finance (DOF) will submit to Congress before the end of July its proposal for the third and fourth packages under the Comprehensive Tax Reform Program (CTRP).
This, even as several leaders of the Senate and the House of Representatives have said during the congressional break they will push for a review of the Tax Reform for Acceleration and Inclusion (TRAIN) law that took effect on January 1, owing to concerns that government economists had underestimated how other inflationary drivers could aggravate its impact.
Finance Secretary Carlos G. Dominguez III told financial reporters that the DOF will be submitting within the month Packages 3 and 4 of the CTRP. Package 3 tackles the single valuation for real property, while Package 4 is focused on financial taxes.
“We will, by the end of the month …submit Package 4. [We will submit Packages] 3 and 4 at the same time…” Dominguez said.
The finance chief pointed out that both packages are revenue-neutral. Under Package 3, the DOF wants land or property valuation to follow international standards, while the department wants to simplify the number of financial taxes being imposed on financial instruments in the country.
“It’s mostly revenue-neutral. For the real estate…we just want to make sure that the appraisal is done on an internationally accepted way and is done regularly. You know in the financial taxes, the goal is to simplify it,” he added.
In March this year, the DOF said that it is targeting to secure Congress’s approval for the remaining packages of the CTRP by the end of the year.
DOF Assistant Secretary Ma. Teresa S. Habitan said the DOF is eyeing for “Package 2 plus” to be ratified in Congress by December along with Package 3 and Package 4 of the CTRP.
Package 2 plus includes measures on increasing excise taxes on “sin” products, namely tobacco and alcoholic products, mining, coal and casino operations.
Package 3 of the DOF’s proposed CTRP tackles property taxation, with the goal of lowering the rate of transaction taxes on land. The offsetting measures include the rationalization of valuation of properties, or increasing valuation closer to market prices.
The fourth package covers capital income taxation, which aims to reduce the taxes imposed on interest income earned on peso deposit and investments from 20 percent to 10 percent. Its offsetting measures include the harmonization of capital income-tax rates for dollar deposits and investments, dividends, equity and fixed income rates to 10 percent. It also includes increasing tax on stocks traded in the stock market from 0.5 percent to 1 percent on gross selling price.
DOF Undersecretary Karl Kendrick T. Chua said last year that the DOF wants all tax-reform packages approved before 2019, which is an election year.