(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.
Anti-poor
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
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