DOF: P174B expected gain from proposed tax reform

Finance official says that Package One of the tax reform program is projected to raise an additional P111.2B from the removal of certain VAT exemptions, except for basic essentials, another P45B from automobile taxes, and P145.4B more from the fuel tax adjustment

THE Duterte administration is expected to generate a net gain of P174.2 billion from the proposed Tax Reform and Inclusion Act, the Department of Finance (DOF) said.

Finance Undersecretary Karl Kendrick Chua said the proposed tax reform and inclusion law, which the DOF submitted to the Congress last September, would result in revenue losses of P127.4 billion in 2018, the first year of its proposed implementation.

But such foregone revenues would be offset by gains totalling P301.6 billion from the additional revenues from the proposed broadening of the Value Added Tax (VAT) and adjusting the excise tax on fuel and automobiles, for a net gain of P174.2 billion, he explained.

In its original form, Chua said that Package One of the tax reform program is projected to raise an additional P111.2 billion from the removal of certain VAT exemptions, except for basic essentials, another P45 billion from automo- bile taxes, and P145.4 billion more from the fuel tax adjustment.

The first of a series of tax reform packages submitted by the DOF to the Congress last September seeks to lower personal income tax (PIT) rates while expanding the base for the valueadded tax (VAT) to plug massive leakages, adjust the excise tax on petroleum products and index these to inflation, and restructure the excise tax on automobiles via a progressive ad valorem system.

Chua said up to 40 percent of the incremental revenues collected from the first DOF-proposed tax reform package “will be used for targeted transfers to lowincome and vulnerable sectors.”