Economy


Tax reform legislation passed on to House plenary




Posted on May 24, 2017


THE comprehensive tax reform program being counted on by the government to fund its ambitious infrastructure plan has made it to plenary debate at the House of Representatives.

Under the Constitution, all tax measures must exclusively originate from the House of Representatives. AFP
Ways and means committee chairman Rep. Dakila Carlo E. Cua endorsed the Committee Report No. 229 containing House Bill (HB) 5636 or the proposed Tax Reform for Acceleration and Inclusion during yesterday’s session presided by Deputy Speaker Romero Federico S. Quimbo.

In his sponsorship speech, Mr. Cua pitched the salient features of the tax reform bill such as the lowering of personal income taxes and the revenue that will be generated from the package intended for social welfare and infrastructure programs of the administration.

“The first objective of this bill is to lower the personal income tax of our countrymen so that disposable income would increase, freeing up more income for living expenses,” Mr. Cua said in his sponsorship speech.

The first tax reform package seeks to exempt those earning an annual income of less than P250,000 from paying personal income tax. The lowest rate is 20%, to be paid by individuals earning between P250,000 to P400,000 annually. The “ultra-rich,” or those earning more than P5 million, are to be taxed at 35%, against the current 32% rate for the top bracket.

“For the development of our country, another objective of the bill is to increase the revenue of the government that will be spent for social welfare, infrastructure, education, job creation and other programs for the country,” he said.

Mr. Cua noted in his speech that tax reform was long overdue but it was not prioritized by previous administrations. “While it is being delayed, the economic progress of the country is also being delayed.”

“The committee on ways and means studied the proposal thoroughly and we think it could help develop the Philippines and its people,” he said

Mr. Cua filed in January HB 4774, drafted by the Finance department, which was eventually consolidated with the 54 other measures filed by other lawmakers.

The Finance department-backed HB 4774 was estimated to yield a net P206.8 billion in its first year of implementation: P162.5 billion from reforming the tax rates and P44.3 billion from legislated tax administration reform.

However, latest estimates from the Finance department show that the configuration of the HB 5636 would only yield a net revenue gain of just P157.2 billion, which will be derived from higher excise duties on oil and cars, taxes on sugar-sweetened beverages and removal of value-added tax (VAT) exemptions to compensate for lower personal income tax rates.

In a chance interview with BusinessWorld before the session started yesterday, Mr. Cua maintained that the third and final reading approval of HB 5636 is still targeted for May 31, the last session day of Congress.

“The target for third reading approval is still May 31,” Mr. Cua said.

Once the bill is approved on final reading, it will be forwarded to the Senate for another round of deliberations. Under the Constitution, all tax measures must exclusively originate from the House of Representatives. -- Raynan F. Javil