(The Philippine Star) | Updated May 5, 2017 - 12:00am
MANILA, Philippines - If passed by Congress, the tax on diesel and higher taxes on other oil products that members of the House committee on ways and means approved on Wednesday will take effect next year, Albay Rep. Joey Salceda said yesterday.
The Department of Finance (DOF) lauded the move, expressing hope that the chamber would be able to approve the bill by June.
The Philippine Chamber of Commerce and Industry (PCCI), the country’s largest business organization, expressed support for the bill and expects it to be passed soon after hurdling the committee level.
PCCI honorary chairman Sergio Ortiz-Luis said they were supportive of the tax reform package because it spreads taxes better and is progressive.
PCCI president George Barcelon said there should be no reason the bill’s passage would not be smooth sailing.
But Salceda, senior vice chairman of the House committee on ways and means, said it was no longer possible for Congress to impose the levies this year as proposed by the DOF.
The House and the Senate will have to approve the bill containing the administration’s so-called tax reforms before the end of the year for it to take effect by Jan. 1, 2018, he said.
Senate President Pro Tempore Ralph Recto also expects protracted debates on the proposed Comprehensive Tax Reform Package (CTRP) being pushed by the administration.
The DOF had wanted all the so-called reforms to be in place last Jan. 1. Later, it bargained with congressmen to have them take effect on July 1, but even this is no longer possible.
The committee still has to submit its report to the House plenary, which is unlikely to approve the bill before its mandatory annual adjournment on June 3.
The chamber’s top priority during its remaining 12 sessions is the dismissal of the impeachment complaint against President Duterte.
Congressmen criticized the bill as anti-poor, saying it would go against Duterte’s goal of uplifting people from poverty.
“The proposed taxes will be a burden on every Filipino consumer and household. Public transportation uses diesel. The tax on diesel will mean higher fares and increased cost of transporting goods, whose selling prices will have to go up. Households use cooking gas or kerosene,” Rep. Rodel Batocabe of Ako Bicol said.
Rep. Anthony Bravo of Cooperatives Network said his group would oppose the removal of VAT (value added tax) exemption cooperatives enjoy.
“Cooperatives are enterprises not intended for profit-making, unlike corporations. Their members are tens of millions of poor people from rural areas. They are the ones who will suffer from the VAT exemption removal,” he said.
Recto also said while there is universal support for the proposal to adjust the individual income tax rates, the other provisions of the tax package that aim to raise more revenues for the government are expected to go through protracted debates in the Senate.
“I support the reduction in income taxes but not the exorbitant increase on oil and others,” Recto said.
“I don’t expect Congress to pass this in May. Long debates will happen at the Senate. I am preparing for it,” he added.
Recto was once chairman of the Senate committee on ways and means and principal author of the expanded VAT law.
Sen. Sonny Angara, current chairman of the ways and means committee, said he has not seen the version approved by his House counterpart.
Based on the proposal, the tax on diesel will initially be P3 per liter, increasing to P5 on Jan. 1, 2019 and to P6 on Jan. 1, 2020.
At present, there is no excise tax on diesel, which is widely used in both private and public transportation.
The ways and means committee approved the tax reform bill on Wednesday.
Aside from diesel, the tax reform bill imposes the same P6 tax staggered over three years on kerosene, liquefied petroleum gas and bunker oil, which is used for producing electricity.
It increases existing taxes on other petroleum products like gasoline, lubricating oils and greases to P8 per liter or kilogram in 2018, P9 in 2019 and P10 in 2020.
Present levies on these products range from P3.50 to P5.35.
The measure also reduces personal income tax for millions of salaried workers.
It likewise raises taxes on cars from 100 percent to more than 300 percent.
As for the proposed new income tax structure, those with small incomes will pay less, while those earning millions like corporate executives will pay more, with the tax rate for them going up from 32 percent to 35 percent. They will also pay a higher flat rate.
The bill also broadens the tax base by removing special laws on value-added tax (VAT) exemptions.
For the VAT, DOF undersecretary Karl Kendrick Chua said the threshold for the exemptions was increased to P5 million and indexed to inflation every three years.
The VAT exemption was also retained for the renewable energy sector and limited to direct exporters, pending the establishment of a DOF-proposed cash refund system.
For the self-employed and professionals within the VAT threshold of P5 million, the substitute bill will require them to pay an eight percent tax on gross sales or receipts in lieu of the income and percentage taxes.
The tax for those above this VAT threshold will be based on the 30 percent corporate income tax rate with minimum tax, Chua said.
The bill also adopted the DOF proposal to subject lottery and sweepstakes winnings from the Philippine Charity Sweepstakes Office to a 20 percent passive income tax in lieu of the five percent prize fund tax.
In a statement, Chua described the approval of the bill at the committee level as “substantial progress” in their push for a CTRP originally submitted by the DOF last year despite the “moderate changes.”
“The substitute bill largely follows the proposal of the DOF with some moderate changes. The team is now estimating the revenue and deficit impact of the substitute measure,” Chua said.
“We remain hopeful that with this committee vote for the substitute bill, the tax reform measure can still be approved at least by the House of Representatives before the Congress ends its first regular session this June,” Chua said, adding “we will also convince the plenary to include some original provisions that were removed.”
The substitute bill was voted on by the House committee on ways and means on Wednesday with 17 in favor, four against and three abstentions.
Earlier, Finance Secretary Carlos Dominguez III said the first package of the CTRP will serve as the “cornerstone” of funding for the government’s massive infrastructure program, which will require some P8.4 trillion over the medium term. – With Mary Grace Padin, Danessa Rivera, Marvin Sy