The Senate-approved Tax Reform for Acceleration and Inclusion (TRAIN) that is targeting to raise P130 billion in fresh revenues to bankroll the Duterte administration’s infrastructure program is expected to encounter rough sailing in bicameral talks when the Senate and House panels meet to reconcile conflicting provisions in the bill.
The Senate, voting 17-1, passed the TRAIN bill on second and third reading in one sitting on Tuesday night’s marathon session, following receipt of Palace certification affirming urgency of enacting the money measure, with Sen. Ana Theresa Hontiveros-Baraquel casting the lone negative vote.
Senate Minority Leader Franklin M. Drilon foresees a “real battle” in the bicameral conference committee, predicting “tough and tedious debates on disagreeing provisions” in the Senate and House versions of the Palace-backed revenue-raising measure. Drilon expects the upcoming bicameral talks “could be the real battleground” for the passage of the TRAIN bill, noting numerous disagreeing provisions in the two versions of the TRAIN bills separately passed by the Senate and the House earlier.
According to the Senate Minority Leader, the bicam talks “will be difficult” as the TRAIN is “headed into a tough battle” when the senators and representatives convene to reconcile their respective versions of the revenue measure.
For instance, a number of senators aired concerns during their plenary deliberations on the bill, citing potential backlash of a provision in the tax-reform package imposing higher tax rates on petroleum products, apart from additional excise taxes on minerals, coals and cosmetic products.
Drilon also cited contentious provisions in the Senate and House versions of the TRAIN bill imposing higher tax rates on automobiles, sugar-sweetened beverages (SSBs), as well as conflicting provisions on value-added tax (VAT) zero rating and lifting of VAT exemptions on senior citizens, among others.
He noted that the Senate and House versions also provided “very different proposals” on tax rates covering SSBs and automobiles, as well the proposed zero rating and lifting of VAT exemptions, which Drilon predicted could also be “a very arduous task” for the bicameral panel. Moreover, he cited the Senate version approved excise taxes on petroleum products, including diesel at P1.75 per liter of volume capacity effective
2018, P3.75 in 2019 and P6.00 in 2010. Drilon warned this could prove to be a “burden to the poor even more.”
The Senate version, however, provided that imposition of higher petroleum taxes could be suspended due to certain factors, citing prices of Dubai crude oil and inflation rate vis-a-vis inflation targets set by the Development Budget Coordinating Committee and the Bangko Sentral ng Pilipinas.
Drilon also noted that compared to the House version, the senators’ approved version opted to impose lower tax rates for SSBs, but imposed higher tax rates on products using high-fructose corn syrup.
In addition, the Senate also adopted a 10-percent excise tax on cosmetic procedures for aesthetic purposes. Drilon said senators, likewise, approved “a 3,000-percent increase in coal taxes” to be collected in three tranches until 2020, which means the current P10 excise tax will be raised to P100 in 2018, P200 in 2019 and P300 by 2010.
At the same time, senators voted to double excise taxes on minerals and mineral products and quarry resources that proponents said was intended to promote “responsible mining and environmental protection.” The Senate version also provided exemptions of prescription drugs and medicines from the VAT.
Drilon said he also anticipates contentious debates on “earmarking provisions” in the Senate approved version of the TRAIN bill, as well as proposed tax exemptions for deserving sectors.
He also cited the Senate-approved version’s earmarking provisions allowing exemptions for various sectors, apart from earmarking 60 percent of incremental revenues to infrastructure, 13 percent for the Armed Forces modernization program and 27 percent to “social mitigating measures.”
According to the senator, the Department of Finance earlier conceded the potentially adverse effect of petroleum excise taxes on the poor even as it offered these earmarking provisions to cushion the backlash of the higher fuel tax rates. Drilon voiced concerns that given the reduced allocations for social-mitigating measures, “it is not certain how the poor can cope with the increase in price of fuel and other commodities.”
Marching order
Malacañang on Tuesday gave lawmakers a marching order to pass the tax-reform bill and 2018 national budget before the year ends, as both measures are needed to bankroll the Duterte administration‘s infrastructure program.
Presidential Spokesman Harry L. Roque Jr. said the TRAIN bill and the 2018 budget must be enacted into law before the year ends to ensure the smooth implementation of its infrastructure program.
“S’yempre po, ang importante ’yung budget dahil ’pag hindi po na-enact ang budget, ’yan po ’yung single most important output ng ating Kongreso—’yung pantaunang budget [Of course, lawmakers have to pass the budget because that is the single most important output of our Congress—the annual budget],” said Roque, who is also a legislator.
“[Kung] wala tayong budget, hindi magkakaroon ng katuparan ’yung ‘Build, Build, Build’ [dahil] hindi magkakaroon ng pagtaas ng budget [If we don’t enact the proposed budget, the ‘Build, Build, Build’ will not see implementation because there will be no increase in funds],” Roque added. The 2018 budget, amounting to P3.767 trillion, is 12.4 percent higher than the budget this year, with a hefty chunk of it allocated for personnel services and infrastructure and capital outlays.
The nonpassage of the proposed budget will lead to the reenactment of this year’s budget, which, according to Roque, might obstruct some of the administration’s infrastructure projects. “[The] implication [of the nonpassage of the 2018] budget [is] we will have a reenacted budget, and we have a slightly higher budget for this year of 2018 compared to 2017,” the Palace official said.
‘Provide safety nets’
Tobacco farm workers expected to be hit by proposed “radical rate adjustments” in so-called sin-tax rates, including a 100-percent increase in excise taxes, pleaded with lawmakers who will craft the reconciled final version of the TRAIN bill to provide safety nets for affected sectors to mitigate the impact of the impending revenue measure.
Trade Union Congress of the Philippines (TUCP) President Ruben D. Torres conveyed their appeal to Sen. Juan Edgardo M.Angara, chairman of the Ways and Means Committee tasked to sponsor the passage of the TRAIN bill, which imposed higher tobacco
tax rates.
“We in the TUCP support the call of various farmers’ organizations in opposing the measure in Senate Bill 1599 seeking to further increase the already-very high taxes imposed on tobacco consumption in the Philippines,” Torres said, recalling that the tobacco industry already contributed to the national coffers “when tobacco excise revenues reached a high of P100 billion in 2015.”
With Elijah Felice E. Rosales