The full implementation of the Comprehensive Tax Reform Program (CTRP) being pushed by the Department of Finance (DOF) for congressional action will help transform the country into an upper-middle-income economy in 2022.
For example, House Bill (HB) 4774, one of the tax-reform measures being deliberated upon at the House of Representatives, is expected to raise P206 billion in additional for the government in its first year of implementation, the DOF said.
DOF Undersecretary Karl Kendrick T. Chua said the additional revenues will help finance the Duterte administration’s infrastructure, education, health and other programs.
“Without this planned investment buildup via tax reform, the government will merely muddle through and cannot meet the requisites to high and inclusive growth, or a growth rate of at least 7 percent per year, driven by investments rather than by consumption,” Chua said at the briefing by DOF officials on HB 4774 before the House Ways and Means Committee on Wednesday.
HB 4774 is a revised package of the DOF-proposed CTRP that was filed by Rep. Dakila Carlo E. Cua of the Lone District of Quirino, who chairs the House Committee on Ways and Means.
The start of the full implementation of tax-policy reform in 2018 will net P162.5 billion, along with another P44.3 billion for that year from the legislated tax-administration reform. These will raise a total of P206 billion in revenues, according to Chua.
He added that HB 4774, which covers the lowering of personal income-tax (PIT) rates and a corresponding set of revenue-compensating measures, will correct the flaws in the country’s tax system.
The House-modified Tax Reform for Acceleration and Inclusion Plan retains the DOF proposal of exempting from PIT payments those with a net taxable income of P250,000 and below, and simplifying tax payments in order to increase the take-home pay of most Filipino taxpayers and make the system fairer and more equitable. The P82,000 exemption for 13th-month pay and other bonuses will remain.
The package also includes lowering the rates for estate and donor’s taxes, expanding the value-added tax base, but retaining the exemptions enjoyed by senior citizens and persons with disabilities, and adjusting automobile and fuel excise taxes.
Complementary reforms to this revised tax package include introducing a sugar-sweetened beverage tax, indexing the motor vehicle user’s charge to inflation, and granting an amnesty to past estate-tax cases.
The estate tax, which is a tax imposed on the privilege of transmitting properties upon the death of the owner, will also be reduced from the current maximum rate of 20 percent to 6 percent under the revised tax-reform plan.