The government is now closer to reforming the country’s tax system for the first time in more than two decades with the Senate’s approval of its version of the proposed Tax Reform for Acceleration and Inclusion Act, the head of the administration’s economic team said.
More importantly, Finance Secretary Carlos Dominguez III said the tax increases would provide a steady revenue stream for the government’s ambitious infrastructure buildup, whose total bill is expected to reach P9 trillion over the medium term.
Thanking the Senate for approving its version of the tax package on third and final reading, Dominguez expressed hopes that both chambers could wrap up bicameral deliberations on the first of the government’s five tax reform packages in time for the submission of the final version to President Duterte for signing by December. If this schedule is followed, the new law could be enacted and implemented by January 2018.
Dominguez said “the Senate’s timely approval of its version moves the government one big step closer to overhauling the tax system for the first time in two decades with the primary benefit going to 99 percent of the country’s taxpayers who are to get higher take-home pay as a result of substantial cuts in their personal income tax rates or, better yet, outright exemption from income taxation.”
The Senate on Tuesday night voted 17-1 to pass the tax package on final reading.
Senate Bill No. 1592, the chamber’s version of the proposed law, was sponsored by Sen. Juan Edgardo Angara, who chairs the Senate ways and means committee.
According to Angara, “under the Senate-approved tax reform package, 60 percent of the incremental revenues will go to infrastructure programs, 27 percent will be allocated to social protection programs including the unconditional cash transfer to the poorest 10 million Filipino families and health, nutrition and antihunger programs, while 13 percent will be allocated to military modernization programs.”
“We thank the Senate for its vote on its version of the tax reform bill,” Dominguez said. “We hope that with the Senate’s swift action on the measure, the two chambers of the Congress can soon sit down in the bicameral conference committee to thresh out a reconciled version of the bill that would provide the most benefit for the majority of the Filipinos while raising additional revenues to support our infrastructure modernization program.”
The Lower House approved its own version last May 31.
The Senate version provides additional revenue-generating measures not included in the House version, but both chambers provide for tax exemptions for those earning P250,000 annually or less.
Other measures approved by the Senate on third and final reading are the doubling of the prevailing documentary stamp tax rates, except for property, which will remain as is, and on loans, which will increase by 50 percent.
The DST increases include those on bank checks that will double from P1.50 to P3; on original issue of shares of stock, P1 to P2, and sales or transfer of shares of stock, P0.75 to P1.50.
Last May, President Duterte certified the bill as an urgent and priority measure for congressional approval, which, he said, was crucial to the financial sustainability of the government’s ambitious agenda to sustain the country’s growth momentum.