THE PRESIDENT can be expected to veto provisions in the recently enacted tax reform and 2018 general appropriations acts, the Budget chief said, even as the presidential spokesman said that budget items to be deleted would be “very minor.”

“Actually, we have submitted the draft of the veto message to the President,” Budget Secretary Benjamin E. Diokno said in a press briefing yesterday.

“Surely there will be some items, although we cannot tell you now which items will be recommended for the veto,” he added.

“And that is also true for the TRAIN (Tax Reform for Acceleration and Inclusion Act or Republic Act No. 10963).”

‘VERY MINOR’ BUDGET VETO
Zeroing in on RA 10964 that provides for a P3.767-trillion spending plan for 2018, Presidential Spokesman Harry L. Roque, Jr. had told reporters separately in a Tuesday press briefing that “the President will be the one to announce later on the very minor line vetoes in the budget.”

RA 10963 — the first of up to five planned tax reform packages — cuts personal income tax rates, and makes up for the expected foregone revenues by reducing exemptions from value-added tax, increasing excise tax rates for fuel and automobiles and introducing an excise levy for sugar-sweetened drinks.

It also doubles taxes for some investment products as well as the mining excise tax, and increases levies for tobacco and coal, while simplifying and reducing estate and donors’ tax rates.

The first package was supposed to rake in an additional P130 billion in the first year of implementation, but last-minute changes to the measure eroded this amount to a little more than P90 billion. The Finance department is now moving to convince Congress to make up for the first package’s revenue shortfall by approving next quarter “the second part of the package” consisting of an excise tax amnesty, easing of bank secrecy restrictions and an increase in the Motor Vehicle Users Charge in order to bring projected revenues of the entire package back to P130 billion.

Some lawmakers have also questioned TRAIN’s mere P2.50-per-pack increase in excise tax on cigarettes from P30/pack currently. Senator Emmanuel “Manny” D. Pacquiao on Oct. 3 filed Senate Bill No. 1599, aiming to tax cigarettes at P60/pack, while Sen. Joseph Victor “JV” G. Ejercito filed on Oct. 23 SB 1605 that raises the said excise tax to P90/pack.

Asked by reporters last Tuesday whether he is comfortable with the increase in tobacco tax in the first package, Finance Secretary Carlos G. Dominguez III replied: “It’s okay, it is what it is… I would say that it is better than a sharp stick in the eye.”

“Right now it’s already there so it makes no sense for us to make a new proposal, so you better talk to other proponents on what their view of the matter is,” said Mr. Dominguez.

“You have to evaluate… will the legislature have the appetite to reconsider something else. So how strong is the desire of the proponent to push it ahead?”

The tobacco tax hike was initially planned for the fourth or fifth package of the Finance department’s comprehensive tax reform program before it was introduced in the first package.

The Finance department aims to submit to Congress next quarter the second tax reform package that seeks to cut the corporate income tax rate to 25% from 30% currently in order to put it at par with levies of the Philippines’ Asian rivals for foreign investments. — Elijah Joseph C. Tubayan

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