Finance Secretary Carlos Dominguez III said the Department of Finance (DOF) will submit to the Congress this January the second package of the government’s Comprehensive Tax Reform Program (CTRP) after the first package was signed into law by President Duterte last month.
President Duterte signed the Tax Reform Acceleration and Inclusion Act (TRAIN) into Republic Act (RA) No. 10963 last Dec. 19 in Malacanang.
Upon signing of the landmark law, the Chief Executive instructed the DOF to ensure its effective implementation and to immediately submit to the Congress in early 2018 the CTRP’s Package 2, which aims to lower corporate income taxes and modernize fiscal incentives in a bid to complement the expected incremental revenues from the first package.
“We are very pleased that the legislature passed the TRAIN bill. The President signed it into law although there are some provisions that he vetoed… We are moving forward with the implementation of the tax reform,” Dominguez said during the recent inter-agency Development Budget Coordination Council meeting.
“…We are going to submit to Congress the package two of the CTRP in January 2018,” added Dominguez.
Dominguez said in terms of revenue potential, the Package Two would be neutral.
He said the DOF scored its first major legislative victory for the Duterte administration and the Filipino people in 2017 with the approval and signing into law of the TRAIN, which will provide hefty income tax cuts for the majority of Filipino taxpayers while raising additional funds to help support the government’s accelerated spending on its “Build, Build, Build” and social services programs.
Dominguez said 99 percent of the country’s population will benefit from the TRAIN, with salaried employees and self-employed individuals earning a taxable income of P250,000 per year, or around P21,000 a month, exempted from paying the personal income tax (PIT). Other taxpayers in higher income brackets will also get to enjoy significant PIT cuts, except the ultra-rich or those earning P8 million a year and above.
Also, 13th-month pay and other bonuses amounting to P90,000 a month are non-taxable.
He said the substantial cuts in personal income tax, will, in effect, increase the take-home pay of majority of taxpayers, which will, in turn, boost their disposable income or purchasing power and further stimulate the economy.
Upon signing the TRAIN bill, President Duterte said this was just an initial part of the gains under the comprehensive tax reform program as the Congress has passed two-thirds of the expected revenues from Package One of the TRAIN.
The remaining one-third involves provisions on the estate tax amnesty, a general tax amnesty, the proposed adjustments in the Motor Vehicle Users Charge and amendments to the bank secrecy law and automatic exchange of information.
About 70 percent of the incremental revenues generated from the TRAIN, meanwhile, will help usher in the country’s “Golden Age of Infrastructure” on the Duterte watch.
This infra buildup will help slash transport and production costs, distribute growth and incomes outside Metro Manila, generate quality, meaningful jobs for Filipinos, attract more foreign investments, and further firm up the country’s credit rating and standing before the international community, the finance chief said.
According to Dominguez, 30 percent of the incremental revenues from the TRAIN will be earmarked for social protection programs, such as targeted cash transfers to benefit the poorest 10 million households in the country. The social protection program under TRAIN is the biggest, in terms of beneficiaries, to be undertaken by the government.
Cash transfer beneficiaries will get P200 a month during the first year of the program, which will increase to P300 a month in the next two years, and a social welfare card that they can use to receive discounts on medicine, transportation, rice, and vocational training.
The TRAIN was finally ratified as one of the last acts of the Congress on Dec. 13, or two days before both chambers of the legislature adjourned for their traditional year-end break, a year and three months after the DOF introduced its original tax reform proposal in the House of Representatives.
The DOF submitted to the House of Representatives its original TRAIN proposal in September last year, which was later modified and introduced in the chamber by Quirino Rep. Dakila Carlo Cua as HB 4774 and later consolidated with other tax reform-related measures as HB 5636.
This House version was finally approved by the House before the adjournment of the first regular session of the 17th Congress last May.
The Senate ways and means committee began last March 2017 its deliberations on the TRAIN, which was filed in the chamber by Senate President Aquilino Pimentel III as Senate Bill (SB) No. 1408 last March 22.
The Senate began conducting plenary debates on the revised measure, SB 1592, on Sept. 23 and finally approved it with substantial amendments last Nov. 28.
More on TaxReform News
Dominguez cites broad reform coalition, past gov’t initiatives for TRAIN success →Date Posted: January 26, 2018
Finance Secretary Carlos Dominguez III has cited the key reforms put in place by the … Continue reading Dominguez cites broad reform coalition, past gov’t initiatives for TRAIN success
Social mitigation measures in place vs inflation →Date Posted: June 5, 2018
The economic managers assured the public Tuesday that the government is fast-tracking the release of … Continue reading Social mitigation measures in place vs inflation
DOF welcomes filing in Congress of corporate tax reform bill →Date Posted: March 27, 2018
Finance Secretary Carlos Dominguez III has welcomed the filing in the House of Representatives of … Continue reading DOF welcomes filing in Congress of corporate tax reform bill
DOF to urge Congress to pass higher tobacco tax rates to further discourage smoking, raise more healthcare fundsDate Posted: April 29, 2019
The Department of Finance (DOF) will “try its best” until the last minute to convince the Congress to impose new “sin” tax rates on tobacco products that will make cigarettes pricey enough to further discourage smoking, especially among teenagers.