Dominguez: All tax reform packages in place by 2020
The head of the Duterte administration’s economic team is optimistic that all seven packages of the proposed comprehensive tax reform program will be approved by next year.
“By 2020, the Department of Finance aims to have all tax reform packages in place, including the reduction of the corporate income tax from 30 percent to 20 percent and the reduction in the number of capital income tax rates from 80 to 42,” Finance Secretary Carlos G. Dominguez III was quoted by the Oxford Business Group as saying during a recent interview.
During its first three years in office, the Duterte administration managed to pass two packages, the first of which was the Tax Reform for Acceleration and Inclusion (Train) Act that took effect in 2018.
The Train law cut income tax rates but jacked up excise taxes on consumption of cigarettes, oil products, sugary drinks and vehicles, among other goods and services.
Dominguez noted that the Train law generated P68.4 billion in net revenue last year, 8.1 percent higher than the P63.3-billion target.
In February, President Duterte signed into law package 1B under Republic Act (RA) No. 11213, or the Tax Amnesty Act of 2019, which paved the way for the ongoing estate tax and delinquencies amnesties.
The DOF had estimated additional revenue from the one-year amnesty on delinquencies to reach P21.26 billion.
Estate tax amnesty, meanwhile, was expected to generate P6.28 billion during its two-year implementation.
However, President Duterte had vetoed general tax amnesty pending the lifting of bank secrecy for tax purposes.
Pending in Congress were five more tax packages, including package 1C which aimed to jack up the rates of the motor vehicle user’s charge.
Package 2, or the Tax Reform for Attracting Better and Higher Quality Opportunities (Trabaho) bill, meanwhile, will not only reduce the corporate income tax rate—currently the highest in Asean, but will also rationalize the tax and nontax incentives being enjoyed by investors to reduce foregone revenue for the government.
Package 2 Plus covered higher excise taxes on “sin” products such as tobacco and alcoholic drinks, with an increase in rates for cigarette products already approved by Congress.
As for packages 3 and 4, these proposed tax reforms were aimed at making property valuation and taxation of capital income and financial services simpler, fairer and more efficient. —BEN O. DE VERA
