DOF readies second tax reform bill

MANILA — The Department of Finance (DOF) will submit to the Congress the second package of the government’s Comprehensive Tax Reform Program (CTRP) this month after the first package was signed into law in December.

President Rodrigo R. Duterte signed the Tax Reform for Acceleration and Inclusion into Republic Act 10963 last December 19 in Malacanang.

Upon signing of the law, the chief executive instructed the DOF to ensure its effective implementation and to immediately submit to Congress early 2018 the package two of CTRP.

The second part of the CTRP aims to lower corporate income taxes and modernize fiscal incentives in a bid to complement the expected incremental revenues of the first package.

“We are very pleased that the legislature passed the TRAIN bill. The President signed it into law although there are some provisions that he vetoed. We are moving forward with the implementation of the tax reform,” Finance Secretary Carlos G. Dominguez III said.

“We are going to submit to Congress the package two of the CTRP in January 2018,” he added.

Earlier, the DOF eyed to submit the second package of CTRP to Congress before the end of 2017.

But the timetable was not met due to unexpected delays particularly on the deliberations on the TRAIN bill. Dominguez said in terms of revenue potential, the package two would be neutral.

The National Economic Development Authority’s analysis showed that, with the CTRP, real gross domestic product level will be higher by 0.5 to 1.1 percent by year 2022, the year when President Duterte steps down from office.

Dominguez said the DOF scored its first major legislative victory for the Duterte administration and the Filipino people in 2017 with the approval and signing into law of the TRAIN bill.

Dominguez said 99 percent of the country’s population stands to benefit from the TRAIN, with salaried employees and self-employed individuals earning a taxable income of P250,000 per year, or around P21,000 a month, exempted from paying the personal income tax (PIT).

Other taxpayers in higher income brackets will also get to enjoy significant PIT cuts, except the ultra-rich or those earning P8 million a year and above.
Also, 13th month pay and other bonuses amounting to P90,000 a month are non-taxable.

He said the substantial cuts in personal income tax, will, in effect, increase the take-home pay of majority of taxpayers, which will in turn, boost their disposal income or purchasing power and further stimulate the economy.

Upon signing the TRAIN bill, President Duterte said this was just an initial part of the gains under the comprehensive tax reform program as Congress has passed two-thirds of the expected revenues from the Package One of TRAIN.

The remaining one-third involves provisions on the estate tax amnesty, a general tax amnesty, the proposed adjustments in the Motor Vehicle Users Charge and amendments to the bank secrecy law and automatic exchange of information.

About 70 percent of the incremental revenues generated from the TRAIN, meanwhile, will help usher in the country’s “Golden Age of Infrastructure” on the Duterte watch.