DOF unveils TRAIN package one’s second-part

With the ratification of the first package of the Comprehensive Tax Reform Program (CRTP) last week, the Department of Finance (DOF) is now preparing for the passage of the second series of the measure in the first quarter next year.

Finance Secretary Carlos G. Dominguez III said that what the bicameral conference committee approved last week was the Tax Reform for Acceleration and Inclusion (TRAIN) “package 1-A.” The passage of the entire two-series bill will be within January to March 2018.

Dominguez admitted the bicam-approved tax reform version would not yield the desired net revenue gain to support the Duterte administration’s ambitious “Build, Build, Build” plan, along with other social services and programs.

Based on a document obtained from the DOF, preliminary estimates on TRAIN 1-A showed that it would generate only R92 billion in net revenue, or R38 billion short of the target of around R130 billion.

“Congress has passed two-thirds of the needed revenue this year and is expected to pass the balance in early 2018. In the coming months, we shall be proposing to Congress the next installment,” Dominguez told reporters last Friday at the DOF headquarters.

Without giving the DOF’s final estimates on the net revenue gain from TRAIN bill 1-A, Dominguez said the second part of package one will be mainly composed of tax administrative measures. “The legislature has committed that they will pass the second part of the tax package one by the first quarter of next year and that will involve the tax amnesty, and raising bank secrecy in criminal cases,” Dominguez said.

Despite some shortcomings of the bicam-approved tax reform bill, Dominguez said the passage of the first TRAIN is “an important milestone” in the country’s history, adding “this is the biggest Christmas and new year’s gift that the Duterte ad- ministration is giving to the people.”

“As you know already that the tax reform package one was ratified and it is an important milestone in our history. It’s the first time we have done a tax reform without any pressure from the outside — no crisis, and no external pressure,” he said.

“It corrects the long standing inequity of our tax system by reducing income taxes for 99 percent of income taxpayers thereby giving them the much needed relief after 20 years of no adjustment. So, everybody’s first R250,000 is now tax free, including yours,” the official added.

For the poor, Dominguez said the government is also giving them targeted cash transfer sourced from higher consumption taxes that the rich will bear as well as the health social services and education.

“Package one also raises significant revenues to fund the president’s priority and social infrastructure programs to reduce poverty from 21.6 percent to the targeted 14 percent by 2020,” Dominguez said.

“About 70 percent of the incremental revenue will go to infrastructure and BBB [Build, Build, Build] programs while the balance will go to social services,” he added.