Duterte’s veto of line items adds P8B more to expected revenues in TRAIN — DOF chief Dominguez

Certain line items vetoed by President Rodrigo Duterte in the recently approved Tax Reform for Acceleration and Inclusion (TRAIN) law are expected to add around P8 billion more to the expected revenue gains from the tax measure.

"Actually with the veto, we estimate the revenues will go up close to P90 billion," Finance Secretary Carlos Dominguez III told reporters at a press conference after the inter-agency Development Budget Coordination Committee (DBCC) meeting in Manila.

The DBCC projects that the TRAIN will contribute a net amount of P82.3 billion in fiscal year 2018.

Dominguez said this could go higher by around P8 billion given the vetoed provisions of the TRAIN law.

In his veto message, Duterte vetoed the reduction in income tax rates of employees of regional headquarters, regional operating headquarters, offshore banking units, and petroleum service contractors and subcontractors effectively maintaining the special tax rate of 15 percent of gross income of said employees.

The President also rejected the zero-rating of sales of goods and services to separate customs territory and tourism enterprise zones.

The exemption from percentage tax of gross sales/receipts not exceeding P500,000 of self-employed professionals was also vetoed as this will result in "unnecessary erosion of revenues and would lead to abuse and leakages."

Duterte also vetoed the exemption of various petroleum products from excise tax when used as input, feedstock, or as raw material in manufacturing of petrochemicals or in the refining of petroleum products, or as replacement fuel for natural gas fired combined cycle power plants.

Lastly, the President vetoed the earmarking of incremental tobacco taxes as the provision effectively amends the Sin Tax Law, which provides guaranteed funds for universl health care.

Apart from the vetoed line items, Dominguez said that around P38 or P40 billion or revenues will be expected as the Congress will pass the "package 1B" of the TRAIN.

"Part B will raise about P38 or P40 billion and we expect that to be passed in the first quarter of the year," he said.

The package 1B embodies the untackled items in the approved tax reform law. This involves the general tax and estate tax amnesties, the vehicle users' charge, and amendments to bank secrecy law.

"We expect to raise money from the amnesty then there will be vehicle users' charge... allowing bank secrecy laws to be suspended in cases of fraud, tax evasion," Dominguez said. — RSJ, GMA News