House OKs bill on Duterte admin’s tax reforms

The House of Representatives on Wednesday has approved the measure that contains the first package of tax reforms proposed by the Duterte administration.

The measure—a substitute bill altogether—breezed past the period of committee and individual amendments, and got a swift approval on second reading.

It then secured approval on third and final reading, 246-9-1.

The House gave its nod to the measure on what is eyed as the last session day before Congress goes on its sine die adjournment, and in line with the deadline set by House leaders. 

The measure was certified as urgent by President Rodrigo Duterte, hence allowing the House to vote on it on both levels within the same session. 

Lower income tax, exemptions lifted

Under the approved version, those with annual income of up to P250,000 are exempted from paying income tax, while those earning between P250,000 to P400,000 will pay a 20-percent tax on the excess over P250,000.

A higher tax rate will be imposed upon the so-called “one percent” of taxpayers, or those who earn more than P5 million every year, who have to settle P1.45 million, plus 35 percent in excess of P5 million.

The bill also provides tax exemption for 13th month pay and other benefits of up to P100,000, from the current P82,000.

It also retains value-added tax (VAT) exemptions for cooperatives, a provision in the previous versions of the bill that other lawmakers had lobbied against.

However, the measure has lifted VAT exemptions for the following sectors:

• power transmission
• lease of residential units
• boy scouts and girl scouts
• domestic shipping importation

There is also a “conditional removal” of VAT exemption for socialized housing, which will be based upon the establishment of a housing voucher system.

The measure also seeks the removal of tax exemption on the Philippine Charity Sweepstakes Office (PCSO) and lotto winnings, which is currently covered by exemptions to the 20-percent tax on interests, royalties, prizes, and other winnings.

Excise tax, sweetened drinks

The bill also seeks to impose a excise tax per liter of refined petroleum products, staggered over three years, as well as on automobiles, except buses, cargo vans, jeepneys, trucks, and special purpose vehicles.

Excise tax on diesel and liquefied petroleum gas will come at P6 per liter—P3 in 2018, an additional P2 in 2019, and another P1 in 2020.

Forty percent of the yearly incremental revenues generated from the petroleum excise tax will be allocated for a social benefits program for four years.

The bill also seeks to impose tax on sugar sweetened beverage, with P10 per liter of volume capacity.

This will increase by 4 percent for every year after the law’s effectivity, eyed in 2018. — RSJ, GMA News