TAXPAYERS saved about P111.7 billion in 2018 after the reduction in personal income due to the implementation of the tax reform law, the Department of Finance (DoF) said Thursday.
“The significant growth in sales reported by retail establishments and restaurants point to the fact that people now have more money to spend as a result of the hefty PIT (personal income tax) cuts under TRAIN, which is now benefiting 99% of our taxpayers,” Finance Assistant Secretary Antonio Joselito G. Lambino II said in a statement.
The Tax Reform for Acceleration and Inclusion (TRAIN) bill was signed into law by President Rodrigo R. Duterte in December 2017. TRAIN is the first package of the Comprehensive Tax Reform Program (CTRP).
TRAIN reduced the personal income tax of individuals earning gross annual income of P250,000 and below to zero, while those with earning above that threshold are subject to graduated tax rates of 20%-35% effective 2018, and 15% to 35% effective 2023, depending on income bracket.
Mr. Lambino noted that sales of convenience, grocery stores, restaurants and even real estate developers increased as the TRAIN Law helped increase consumer spending.
The DoF’s Strategy, Economics and Results Group (SERG) reported that revenues last year reached P68.4 billion, higher by 8.1% than the full-year target of P63.3 billion.
The largest gains in government revenue in 2018, according to the SERG, were in tobacco and auto excise taxes and documentary stamp tax collections.
The DoF earlier estimated that TRAIN implementation resulted in a combined P12 billion worth of additional income per month for individual taxpayers, with most of them compensation earners.
The Bureau of Internal Revenue (BIR), meanwhile, said last month that it is expecting lower income tax collections generated during the April 15 tax deadline due to the lower rate for PIT dictated by the TRAIN Law.
“Compared with 2018 collection, we are expecting that maybe it might be lower but we are hoping we still exceed the actual April 2018 collection because kahit bumaba ang personal income tax ng individual, mas dumami naman ang filers because of TRAIN and mas mababa ang income tax rate (because even if personal income tax decreased for individuals, there will be more filers because of TRAIN and also the income tax rate became lower),” BIR Deputy Commissioner Marissa O. Cabreros has said.
Despite possible decline in tax collections, the BIR still expects higher collections over the full year, with the expected increase in the double digits as taxpayers avail of an amnesty program. In 2018, during the first year of TRAIN implementation, it collected P1.962 trillion. — Reicelene Joy N. Ignacio