DOF: ‘Vanity tax’ not part of proposed tax reform

The Department of Finance will first study if moves in Congress to slap a so-called “vanity tax” would be feasible, an official said Friday.

But Finance Undersecretary Karl Kendrick T. Chua clarified that such tax on beauty products and services was not included in any of the tax reform packages being pitched by the DOF to Congress.

“It is not in our package of reforms. We will need to study it first before considering, before we can have a position,” Chua told the Inquirer.

Ako Bicol Party-List Rep. Rodel M. Batocabe was pushing for vanity tax instead of raising the excise taxes on oil products.

“Tax revenues from the beauty industry, if properly collected has the capability of surpassing even the sin taxes collected from tobacco and alcohol,” Batocabe earlier said in a statement.

Last Thursday, Chua reiterated the need to hike the taxes slapped on oil, given lower global prices as well as expectations such low-price environment would continue in the near-term.

According to Chua, as excise tax on oil remained unadjusted for two decades now, the government incurs foregone revenues of around P145 billion yearly, equivalent to more than 1 percent of the gross domestic product (GDP).

Increasing fuel excise is part of the first package of the DOF’s tax policy reform program aimed for passage this year, which seeks to lower personal income taxes, broaden the value-added tax (VAT) base, adjust excise taxes on petroleum and automobiles, reduce the estate and donors tax, as well as provide an amnesty to past estate tax cases.

Chua had said that while domestic oil prices are expected rise following a hike in taxes, the end-result to consumers of the entire first tax package, which includes bringing down personal income tax rates, would be more take-home pay.

“Taxpayers will also get a relief from the impact of the fuel excise adjustments because of the lower personal income tax rates that the DOF is proposing under its comprehensive tax reform program, which will more than offset the slightly higher transport, food and commuting costs,” Chua had said.

“With higher revenues from the oil excise tax reform, we can fund the massive public infrastructure program that is needed to reduce traffic congestion, improve connectivity, and raise the economic productivity of Filipinos, especially those living in the countryside. Without the comprehensive tax reform program, all these improvements would never be possible,” according to Chua.

The second tax reform package, which would likely be introduced in 2018 or after the Sin Tax Reform Law matures, would levy taxes indexed to inflation on sweetened drinks, as well as further hike the excise tax slapped on alcohol and tobacco products.
The four other tax packages include those on corporate income tax and incentives; property tax; capital income tax; and other taxes (carbon tax, “fatty” food tax, lottery and casino tax, as well as mining tax), eyed for passage in the next two to three years. JE