Populist provisions in the Duterte administration’s tax-reform bill—dubbed as the Tax Reform for Acceleration and Inclusion (TRAIN)—remain as hurdles to its passage, as some lawmakers have expressed reservations about its “contentious” provisions.
But House leaders have expressed confidence that the Department of Finance (DOF)-backed tax package will reach plenary on Monday, four months after it was introduced at the lower chamber. PDP-Laban Rep. Alfredo Abelardo B. Benitez of Negros Occidental, head of the Visayan bloc, said he is having second thoughts about backing the tax-reform bill. While it seeks to lower personal-income tax rates, Benitez said it compensates for the revenue loss by imposing “burdensome” taxes on important commodities. Benitez was also not in favor of increasing excise taxes on petroleum, as well as sugar sweetened beverages (SSBs).
He said the 42-man Visayan bloc will ask the leadership to lower the proposed P10 excise tax per liter of volume capacity on SSBs.
Bayan Muna Party-list said it is mulling over to withdraw as coauthor of the measure as the only provision adopted from its original proposal was the lowering of personal incom-tax rates.
“This bill [TRAIN] will definitely hit the poor hard because it would mean higher prices of basic goods and services,” Party-list Rep. Carlos Isagani Zarate of Bayan Muna said.
“Once the bill is enacted into law, diesel which is P31 per liter now would be P34 next year, P36 in 2019 and P37 in 2020. Gasoline, which is P45 per liter, now would increase to P52 next year,” Zarate added. If approved, LPG could go up to P574 next year from the current P541 per cylinder.
“These are just a few of the strategic products that would increase and would cause a domino effect to other products and services,” Zarate said. “As members of Congress, we should listen to the sentiments and clamor of our people by stopping this antipeople tax-reform bill.”
The Party-list Coalition, composed of 47 representatives, said it would most likely abstain from voting if a compromise is not reached to remove the value-added tax (VAT) exemptions for various cooperatives. According to Party-list Coalition President and Party-list Rep. Rodel Batocabe of AKO Bicol, the group will insist on retaining the VAT exemptions for small and medium cooperatives.
For his part, Minority Leader and Lakas Rep. Danilo Suarez of Quezon vowed to oppose the bill in the plenary until the government improves its absorptive capacities.
“The minority reiterates the need for government agencies to improve their absorptive capacity before pushing for a comprehensive tax reform. We need not rush most, especially if we are not yet capable of spending the appropriated budget efficiently,” he added.
Suarez said he will suggest to the leadership a “revenue neutral” period for two years. “During this period, the government should only spend what it earns.”
He also called for the full implementation of Republic Act 9335, or the lateral attrition law.
“This law provides penalties and rewards against officials of the Bureau of Internal Revenue [BIR] and the Bureau of Customs [BOC]. Unfortunately, this law is dormant. Without the attrition law, the widening gap between government spending and revenue stands defenseless to the inefficient tax collection,” Suarez said.
‘Confident’
In a news briefing, PDP-Laban Rep. Dakila Carlo E. Cua of Quirino, chairman of the ways and means committee and main author of the bill, has expressed confidence that the lower chamber will pass the tax-reform package before the Congress sine die adjournment on May 31. “We are confident in the leadership of our Speaker and our Majority Leader that, with their spearheading the supermajority, almost 100 percent sure that it will be passed in lower chamber,” Cua told reporters.
Majority Floor Leader Rodolfo Fariñas said the bill will reach the plenary on Monday and will be approved on second reading by Wednesday next week. He said bill will be transmitted to the Senate after its approval this month.
Cua said House Bill (HB) 5636 will enhance the progressivity of the tax structure through rationalization of the internal revenue system. He said it will also provide equitable relief to taxpayers to improve their levels of disposable income and increase their economic activity.
The bill also seeks to ensure that the government is able to provide better infrastructure, health, education and social protection by raising sufficient revenues through the expansion of the VAT base, increase of the excise taxes on petroleum and automobiles, introduction of excise tax on sugar-sweetened beverages and adoption of measures to improve administration.
Provisions
Under the bill, workers earning P250,000 will be exempted from paying personal income taxes.
The measure also provides automatic adjustment of taxable income levels and their corresponding base every three years beginning 2021 based on a five-year cumulative consumer price index inflation rate.
The bill calls for imposing taxes on kerosene and liquefied petroleum gas and increasing tax rates for various fuel products, including leaded premium gasoline, unleaded premium gasoline and aviation turbo jet fuel.
It also stipulates new schedules and brackets for auto excise tax in the package. The DOF is pushing for the excise tax on vehicles to solve the traffic problem.
For the lower bracket, if the net manufacturer’s price/importer’s selling price is P600,000 the excise tax will be 3 percent by 2018 and will increase to 4 percent by 2019.
For the higher bracket, If the net manufacturer’s price/importer’s selling price is over P3.1 million, the excise tax will be P1.46 million plus 90 percent of the value in excess of P3.1 million in 2018. In 2019, if the net manufacturer’s price/importer’s selling price is over P3.1 million, buyers would be taxed P1.82 million plus 120 percent of the value in excess of P3.1 million.
SSBs would be also levied an excise tax of P10 per liter of volume capacity, subject to a 4-percent annual increase after January 1, 2018.