Se­nate to re­tain ‘50%-70%’ of DoF tax pack­age

Business World - - THE ECONOMY - Eli­jah Joseph C. Tubayan

THE SE­NATE is plan­ning floor de­lib­er­a­tions on Sept. 20 on new rev­enue mea­sures that will partly com­pen­sate for di­lu­tions of the orig­i­nal tax re­form pro­gram pro­posed by the Depart­ment of Fi­nance (DoF).

Se­nate ways and means com­mit­tee chair Sen­a­tor Juan Edgardo M. An­gara said the cham­ber aims to re­tain about 50% to 70% of the DoF’s Tax Re­form for Ac­cel­er­a­tion and In­clu­sion Act, but main­tained the rev­enue out­come will be un­changed.

“More or less it’s maybe 50 to 60 or 70% of what the DoF pro­posed,” he told the me­dia af­ter the tax re­form’s syn­the­sis hear­ing yes­ter­day.

Changes in­clude the low­er­ing of the su­gar- sweet­ened bev­er­age ex­cise tax to P5 per liter from P10 ini­tially, the phas­ing of the P6 ex­cise tax on petroleum, as well as the bracket struc­ture for the au­to­mo­bile ex­cise tax.

“I think we will stick to the three- year struc­ture that the house pro­posed, its just the dis­tri­bu­tion of the P6,” he said.

The value- added tax ex­emp­tions on the sale of so­cial­ized hous­ing and on re­new­able en­ergy will like­wise be re­tained — adding to the list of those sec­tors keep­ing their ex­emp­tions in the House ver­sion, such as sales booked by co­op­er­a­tives and pur­chases by se­nior cit­i­zens and per­sons with dis­abil­i­ties.

Mr. An­gara has not pro­vided fi­nal de­tails on the changes, not­ing that the cham­ber is still work­ing on it.

He said that the com­mit­tee is still wait­ing for the com­ments of all Se­na­tors be­fore a fi­nal com­mit­tee re­port emerges.

How­ever, de­spite th­ese mod­i­fi­ca­tions, the Sen­a­tor said that he ex­pects around P130 bil­lion in ad­di­tional rev­enue for the first year of the tax re­form’s im­ple­men­ta­tion.

“It’s about the same, P130 ( bil­lion),” said Mr. An­gara.

The pro­jected out­come is due to mea­sures like a higher tax on in­ter­est in­come on for­eign cur­rency de­posits, higher taxes on div­i­dend in­come, an ex­cise tax on cos­met­ics, and levies on plas­tic bags.

The com­mit­tee’s pro­jected rev­enue is slightly lower than that of the House-ap­proved ver­sion, House Bill No. 5636, which is ex­pected to gen­er­ate P133.8 bil­lion, also sig­nif­i­cantly lower than the Fi­nance depart­ment’s orig­i­nal P157.2 bil­lion ver­sion.

De­spite for­ward­ing th­ese mea­sures to make up for the losses, Mr. An­gara said that it still has to be fur­ther stud­ied. There are still no hard fig­ures for the newly pro­posed du­ties.

“I think we also need to bal­ance the ef­fects, the eq­uity ef­fects of the pro­posed tax pack­age.”

“Clearly, the plas­tic bag levy needs to be stud­ied fur­ther in view of what the [Trade depart­ment] said. They are still con­struct­ing a road map so maybe we can hold off on that, since even the DoF doesn’t know yet how to ad­min­is­ter such a tax.”

“Cos­met­ics, we have to look at if there’s a way that we can sep­a­rate the van­ity pro­ce­dures from the med­i­cal pro­ce­dures if there is, then we want to tax one but not the other.”

Fi­nance Un­der­sec­re­tary Karl Ken­drick T. Chua said he wel­comes the in­tro­duc­tion of the new mea­sures, but added that they have to un­dergo fur­ther study, not be­ing part of the DoF’s orig­i­nal pack­age.

“We wel­come that they are con­sid­er­ing it, but we need stud­ies and con­sul­ta­tion sim­i­lar to what we did for pack­age one. So we hope that we will put more pri­or­ity on the orig­i­nal pack­age one, be­cause those mea­sures are re­ally well­stud­ied,” he said.

“Ba­si­cally we have to hear it and get more in­for­ma­tion. It’s too early, we have to do full home­work,” added Mr. Chua.

Asked whether his team in the Fi­nance depart­ment has rev­enue es­ti­mates for the new mea­sures, he said: “Th­ese are very very pre­lim­i­nary es­ti­mates.”

Mr. Chua said he con­tin­ues to hope for pas­sage of the DoF’s ver­sion, and plans to urge leg­is­la­tors to strengthen the bill dur­ing the ple­nary de­lib­er­a­tions as well as in the bi­cam­eral con­fer­ence be­fore the Pres­i­dent ap­proves it.

Mr. Chua said that the P133.8 bil­lion rev­enue level has been pro­grammed into the 2018 bud­get — which was ap­proved on sec­ond read­ing — leav­ing the Se­nate lit­tle room to tweak the tax re­form bill fur­ther.

“If they cut some­thing, they have to find some al­ter­na­tive,” Mr. Chua said.

He also added that the govern­ment faces ad­di­tional costs next year.

“There’s a free tu­ition that has to be funded, P50 bil­lion… Marawi, P30 bil­lion. So P134 plus P80 bil­lion is more than P200 bil­lion, so as much as pos­si­ble we want them also to con­sider the big­ger pic­ture,” he said. —

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