Dominguez hails Bicam’s approval of proposed tax reforms

MANILA --  Finance Secretary Carlos Dominguez III is happy with the Bicameral Conference Committee’s  approval of the first package of the proposed tax reform, gains from which is seen to reach PHP130 billion, near the PHP157 billion projected by the Department of Finance (DOF).

In a briefing after a field visit at the LafargeHolcim cement production plant in Norzagaray, Bulacan Tuesday, the Finance chief said the Committee’s approval of the initial Tax Reform for Acceleration and Inclusion (TRAIN) bill encourages Finance officials to work harder for the next batches.

“We are now ready for the TRAIN to leave the station,” he said, citing its advantage on the Duterte administration’s infrastructure program called “Build, Build, Build”.

“The PHP130 billion that we expect from the TRAIN, the net revenue effect, is certainly very close to the bill, the net revenue, that was passed in the House (of Representatives) so we are pleased that the legislature has given us to where we go to  begin a really serious infrastructure program,” he said.

Under the Bicam-approved measure, which is awaiting ratifications from the House of Representatives and the Senate before it is submitted to the Office of the President for signature, the Bureau of Customs (BOC) will have the biggest revenue gains because of the higher excise taxes on fuel.

“The Bureau of Customs will be fully empowered in effect, especially since we are also implementing a fuel marketing system,” he said citing that this system would be implemented in 2018.

Fuel marking will be in place next year and Dominguez said this program would certainly help the government, particularly the BOC, identify smuggled, misdeclared or under-declared fuel.

Fuel marking is a process wherein a liquid solution is mixed with the oil product to check its grade and for the government to check if the company is paying correct taxes.

The Bicam-approved measure also imposes a PHP6 tax per liter on sweetened juices and energy drinks and PHP12 tax per liter for drinks with high-fructose corn syrup.

But the main goal of the first package of tax reform is the cut in personal income tax.

Under the Bicam-approved measure, the first PHP250,000 annual earnings of all workers will be exempted from taxes while exemption on tax on 13th month pay was raised from PHP82,000 to PHP90,000.

“Essentially the TRAIN has delivered the largest bonus to Filipinos ever delivered by any administration. Everybody’s first PHP250,000 is now tax free,” Dominguez said.

The Finance chief said the cut in income tax would reduce government revenues by around PHP346 billion annually and increases take home pay of workers by about PHP20,000 a year.

He said Filipinos who belong to the lower 50 percent bracket of the society would be given cash provision that is not part of the Conditional Cash Transfer (CCT) program to help them alleviate the impact of higher oil prices, among others.

Aside from fuel tax hikes, the Bicam-approved measure also requires a 5 percent tax on cosmetic procedures and doubled the mining tax rates.

Auto excise taxes effective next year, if the President signs the tax reform measure, is at 4 percent for vehicles worth up to PHP600,000, 10 percent for those over PHP600,000 up to PHP1 million; 20 percent for those worth over PHP1 million up to PHP4 million; and 50 percent for those worth over PHP4 million.

Tobacco tax will be PHP32.50 per pack from January 1 to June 30, 2018; PHP35 from July 1, 2018 to December 31, 2019; PHP37.50 for the next 24 months; and PHP40 for the succeeding 24 months and will increase by four percent annually thereafter. (PNA)