FOLLOWING President Rodrigo R. Duterte’s appeal to the Senate to pass Tax Reform for Acceleration and Inclusion (TRAIN) legislation, the Finance department said its implementation is possible by the end of the year.
“With the President’s certification of the TRAIN bill as an urgent and a priority measure, complemented by the personal appeal he made before our lawmakers in his SoNA (State of the Nation Address), we are hopeful that the Senate will pass the measure soon enough so that it could be implemented possibly by the third or fourth quarter of the year,” Finance Secretary Carlos G. Dominguez III was quoted in a statement as saying.
This would put tax reform ahead of schedule with a planned January 2018 implementation.
Mr. Duterte — who has signed an order certifying tax reform as an “urgent” bill — asked the Senate to “support my tax reform in full and to pass it,” during his SoNA.
The first package of the tax reform program is expected to fund the government’s P8.4 trillion infrastructure program, equivalent to 7.1% of gross domestic product by 2022, from 5.4% currently.
House Bill 5636 passed third and final reading in May, and is estimated to generate some P1.163 trillion in revenue over the medium term, with P133.8 billion in 2018 — the expected year of implementation — then P233.6 billion in 2019, P272.9 billion in 2020, P253 billion in 2021 and 269.9 billion in 2022.
However the bill is still open to possible dilution as it is currently stuck at the Senate’s ways and means committee.
Senate Bill No. 1408 will actually yield P1.344 trillion over the same five years: P169.1 billion in 2018, P262.5 billion in 2019, P305.8 billion in 2020, P290.1 billion in 2021 and P316.6 billion in 2022.
Mr. Duterte said that the bill will help the poor who will immediately benefit from the reform.
Under the proposed law, personal income tax rates will be adjusted to shift the burden off lower-income segments towards the “ultra-rich,” with those earning P250,000 a year or less to be exempt from paying taxes.
On the other hand, those earning at least P5 million annually will pay P1.45 million plus 35% of the amount beyond that threshold.
The first tax reform package also removes some value-added tax exemptions, increases excise taxes on oil products and automobiles, introduces a sugar-sweetened drinks excise tax, harmonizes estate and donor tax rates, and mandates improved tax administration measures such as a fuel marking scheme, the linkage of point-of-sale machines, and the mandatory issuance of e-receipts. — Elijah Joseph C. Tubayan
