Senate approves proposed tax reform measure

Voting 17-1, the Senate approved on third and final reading Tuesday night the proposed tax reform bill, as promised before senators take their Christmas break on December 16.

Certified urgent by President Duterte, the Upper Chamber passed Senate Bill 1592 or the proposed Tax Reform for Acceleration and Inclusion (TRAIN) immediately after ap-

proving it on second reading the same day. Its approval came six months after its counterpart House Bill 5636 was passed in the Lower House last May.

After intensive discussions, which at times led to heated debates over the provisions of the measure, senators agreed to pass it as Congress rushes to approve it in the bicameral level before the year ends.

Of the 18 senators present in Tuesday's session, 17 voted in the affirmative, namely, Sens. Aquilino Pimentel, Ralph Recto, Vicente Sotto III, Franklin Drilon, JV Ejercito, Sonny Angara, Joel Villanueva, Sherwin Gatchalian, Francis Escudero, Emmanuel Pacquiao, Grace Poe, Loren Legarda, Nancy Binay, Cynthia Villar, Richard Gordon, Juan Miguel Zubiri, and Gregorio Honasan.

Only Sen. Riza Hontiveros voted to reject the bill.

Sen. Panfilo Lacson, who was present in Tuesday's session, was absent in the voting. He had earlier said he will not vote in protest of his colleagues' disinterest over his proposed amendments.

In the Senate version of the TRAIN bill, workers earning 1250,000 a year would be exempted from paying income tax regardless of the number of dependents.

Earnings in excess of 1250,000 would be subjected to an income tax, ranging from 20 percent to 35 percent, depending on their respective total annual taxable income.

This translates to an approximate tax-exempt monthly income of 121,000, according to the estimates of Senate Committee on Ways and Means.

The Senate retained the 182,000 tax exemption for 13th month pay and other bonuses.

Sweetened beverage The Senate-approved TRAIN would impose an excise tax of 14.50 per liter for beverages using caloric and noncaloric sweeteners, and a tax of 19 per liter for beverages using high fructose corn syrup (HFCS). The House version levies a 110-per-liter for local sugar and 120 per liter for HFCS.

Senators scrapped initial proposals to impose excise tax on sweeteners based on sugar content and stuck to volume basis.

Excluded from excise tax, meanwhile, were milk, ground, and instant coffee, 100-percent natural fruit and vegetable juices, unsweetened tea, meal replacement, and medically indicated beverages.

Sweetened beverages that used coco sugar and stevia are also excluded.

VAT exemption SB 1592 increased value-added tax (VAT) threshold from 11.9 million to 13 million, thus exempting small businesses with total annual sales of 13 million and below from paying VAT.

Prescription drugs and medicines will be VAT-free.

The 12-percent VAT exemption was retained for raw food and agricultural products, health and education, as well as of senior citizens, PWDs, BPOs, and cooperatives.

VAT exemption was likewise retained on leases below 115,000 per month, and of socialized housing priced at 1450,000 and below. Mass housing projects that are worth 12 million and below located outside of Metro Manila will also continue to enjoy VAT exemption.

Exemption of government-owned and -controlled corporations (GOCCs), state universities, and colleges (SUCs) and national government agencies will shift to a form of subsidy through the tax expenditure fund (TEF) under the national budget.

Fuel, automobile tax

The Senate agreed to a staggered 16 excise tax on diesel and bunker fuel oil which are mostly used for transportation.

The Senate adjusted the rates to 1.75-2.00-2.25 for diesel and bunker fuel oil which are mostly used for transportation.

The Department of Finance (DOF) originally proposed a straight out P6 increase, while the House provided for a phased implementation of 3-2-1.

The Senate excluded kerosene from excise tax since it is widely used as fuel for lighting and cooking by around 3 million households especially in farflung areas.

Tax on liquified petroleum gas, on the other hand, was reduced to 13.

Senators also approved a 3,000percent increase in coal taxes, to be implemented in three tranches until 2020. From the current 110 excise taxes in coal, it will be increased to 1100 in 2018, 1200 in 2019, and 1300 in 2020.

Meanwhile, a 10 percent excise tax would be imposed on cars worth up to 11 million, while 20 percent on cars with exceeding amounts.

Hybrid and electric cars were exempted from the excise tax to encourage greener and cleaner transportation options.

Other taxes

The Senate had earlier approved a 10 percent excise tax on cosmetic procedures for aesthetics purposes. Reconstruction of facial and body defects due to birth disorders, trauma, burns, disease, and those intended to correct dysfunctional areas of the body shall be exempt.

Excise tax, meanwhile, was doubled from the current two percent to four percent for all non-metallic minerals and quarry resources, and all metallic minerals including copper, gold and chromite.