Senate, House ratify TRAIN

The Senate and the House of Representatives ratified late last night the first package of the proposed Tax Reform for Acceleration and Inclusion (TRAIN), which increased the take-home pay of workers but also hiked taxes on fuel, vehicles and sugars weetened beverages while expanding the value-added tax (VAT) base.

The expected approval of the so-called tax reform bill was delayed by a last-minute disagreement over exempting local coal from the proposed higher levy.

The TRAIN was supposed to be ratified as early as last Tuesday.

The ratification of the measure, which seeks to raise P130 billion in revenues and overhaul the country’s 20-year-old tax regime, came on the eve of Congress’ adjournment for a month-long break.

Malacañang wants the TRAIN to take effect on Jan. 1 after President Duterte’s expected signing of it into law before the end of the year. The measure is meant to bankroll the administration’s “Build, Build, Build” infrastructure program.

Senate President Pro Tempore Ralph Recto warned that despite its many social protection provisions, the TRAIN will hit the D and E classes of the population because of its inflationary effects.

“I think the consumer taxes (in TRAIN) are still too high. The D and E will bear the brunt of this. The D and E in effect will pay for the tax breaks and the ‘Build, Build, Build,” Recto told reporters.

He said it is estimated the tax measure when implement- ed will trigger inflation of about five percent or higher than the four percent, which is at the high end of the band projected by the government for next year.

Recto said he was able to squeeze in some “burden sharing” provisions like increased taxes on mining and documentary stamp tax (DST) that do not directly affect ordinary Filipinos.

Recto and Sen. Joseph Victor Ejercito also put in a provision exempting prescription medicine from VAT.

For petroleum, the measure imposed higher levies on liquefied petroleum gas (LPG), gasoline and diesel, stoking fears that the increase will lead to higher prices of basic commodities.

LPG will be slapped a P1 per kilogram tax that will be increased to P2 in 2019 and hiked to P3 in 2020 and on- wards.

Diesel will have a P2.50 per liter tax on the first year of implementation in 2018, P4.50 in 2019 and P6 in 2020.

All variants of gasoline fuel will be taxed P7 per liter next year, P9 in 2019 and P10 in 2020.

According to the Department of Finance (DOF), the richest 10 percent of Filipinos consume 50 percent of oil products in the country.

The measure also has a safeguard provision that would suspend the tax if Dubai crude oil exceeds $80 per barrel and authorized the DOF to require fuel marking to combat oil smuggling.

Package 1 of the TRAIN imposed a tax of P6 per liter for beverages using caloric and non-caloric sweeteners and P12 per liter for beverages using high fructose corn syrup.

Tax-exempt are all milk, 3-in-1 coffee, 100 percent natural fruit and vegetable juices, meal replacement and medically indicated beverages. Beverages that used coco sugar and stevia are also excluded from taxation. –