Approval of more tax reforms sought
The Department of Finance targets to get Congress’ nod on three more tax reform packages by yearend to complement reforms in personal and corporate income taxation.
In a presentation during last Friday’s Philippine Economic Briefing in Davao City, Finance Assistant Secretary Maria Teresa S. Habitan said that for package “2+,” the DOF was seeking Congress ratification of the planned removal of the value-added tax exemptions enjoyed by casinos as well as coal by December.
A further increase in alcohol and tobacco excise taxes that will also form part of package 2+, meanwhile, is eyed for an earlier approval by June.
Under Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Act signed by President Duterte in December, the unitary excise tax slapped on cigarettes already rose to P32.50 per pack effective Jan. 1 from P30 a pack last year.
The TRAIN Law mandated a further hike in the cigarette excise tax rates to P35 per pack from July 1, 2018 to Dec. 31, 2019; P37.50 a pack from Jan. 1, 2020 to Dec. 31, 2021; and P40 from Jan. 1, 2022 to Dec. 31, 2023.
The excise tax rates slapped on alcoholic drinks also increase every year under the Sin Tax Reform Law of 2012.
Starting Jan. 1, the TRAIN Law jacked up or slapped new excise taxes on oil, cigarettes, sugary drinks and vehicles, among other goods, to compensate for the restructured personal income tax regime that raised the tax-exempt cap to an annual salary of P250,000.
Also part of package 2+ is the comprehensive mining tax reform regime that the DOF wanted ratified also by December.
In the case of the third tax reform package covering property taxation and valuation as well as the fourth package on capital income and financial taxes, the DOF was also targeting their ratification by Congress in December.
When Congress resumed session in January, the DOF submitted for the Lower House’s consideration its proposed second tax reform package on corporate income taxation.
The second package aims to broaden the tax base by repealing 123 special laws on investment tax incentives and consolidating them into a single omnibus law.
While cutting down on incentives, the second tax reform package will bring down the corporate income tax rate starting Jan. 1, 2020 by 1 percentage point for every reduction in investment tax perks equivalent to 0.15 percent of gross domestic product in 2018 or an estimated P26 billion.
