Remaining tax reform packages submitted to Congress

Remaining tax reform packages submitted to Congress

- in Economy, News, Philippines
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Image via RMN.ph

The Department of Finance (DOF) has submitted to Congress the remaining packages of the Duterte administration’s comprehensive tax reform program (CTRP). The commitment of the DOF to this submission is part of the larger overriding goals of the administration to revamp the Philippine taxation system into one more transparent, efficient, and simpler for ordinary Filipinos and small businesses.

Besides this submission, other packages for the CTRP have been submitted by the DOF before end-July to the House of Representatives. Once submitted, the proposed taxation measures are to be reviewed by Congress.

The first CTRP package, now the Tax Reform for Acceleration and Inclusion (TRAIN) Law, was designed to provide income tax cuts for 99 percent of Filipinos, while simultaneously raising funds to support the administration’s infrastructure push and human capital development. This is according to statements by Finance Undersecretary Karl Kendrick Chua.

The second package is designed to address flaws int he corporate taxation system. Current measures tend to favor a select group of corporations and limited the national and local government from generating commensurate levels of revenue from certain businesses or individuals. In President Duterte’s State-of-the-Nation Address last July, tax reform was identified as a top priority for this administration. Particular focus was placed on Package 2, which aims to benefit small businesses. The Package was described as “stands between today and millions of jobs in the near future” by the President.

As part of the CTRP, these packages are designed to progressively address issues with the current Philippine taxation system.

According to the Philippine News Agency, the CTRP initiative in total includes the following packages:

* Package 1B, which is the proposed tax amnesty program and adjustments in the Motor Vehicle Users Charge (MVUC). This was submitted together with Package 1A or TRAIN in 2016 but was not approved together with TRAIN;

* Package 2, which aims to lower the corporate income tax (CIT) rate and broaden the tax base by modernizing investment tax incentives (Submitted on Jan. 16, 2018);

* Package 2 plus, which proposes to increase the excise tax on tobacco and alcohol products and increase the government’s share from mining (For the tobacco and alcohol tax, the DOF adopted Senate Bill 1599 introduced by Sen. Emmanuel Pacquiao while for the mining tax, it endorsed House Bill 7951 filed by Rep. Estrellita Suansing;

* Package 3, which institutes reforms in property taxation to make the valuation system more equitable, efficient, and transparent (Submitted on July 26, 2018); and

* Package 4, which proposes to rationalize capital income taxation to address the multiple rates and different tax treatments and exemptions on capital income and other financial instruments (submitted on July 24, 2018).

Finance Secretary Carlos Dominquez III expressed hope that Congress would be able to pass Package 2 and the rest of the CTRP packages before year’s end, especially considering that the initiative has the full support of the President.

 




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