Taxpayers reap P111.7-B cash windfall from hefty income tax cuts–DOF

Date Posted : May 9, 2019

Taxpayers reap P111.7-B cash windfall from hefty income tax cuts–DOF

Date Posted : May 9, 2019

Filipino taxpayers have reaped a cash bonanza of P111.7 billion in personal income tax (PIT) cuts in 2018 with the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the first package of the Duterte administration’s Comprehensive Tax Reform Program (CTRP), the Department of Finance (DOF) said.

In a recent DOF executive committee (Execom) meeting, the Strategy, Economics, and Results Group (SERG) led by Undersecretary Karl Chua also reported that TRAIN revenues reached P68.4 billion, which is P5.1 billion or 8.1 percent higher than the full-year target of P63.3 billion.

The SERG report explained that the largest gains were seen in tobacco excise, auto excise, and documentary stamp tax collections. PIT collections were also higher than expected due to better compliance and an increase in the number of registered taxpayers. Taken together, these highest gainers contributed around 51.5 billion of the 68.4 billion of additional revenue from TRAIN.

Auto excise tax revenue was above target by P6.2 billion, owing in part to higher purchasing power for vehicles.

Documentary stamp tax revenue was also above target by P4.7 billion, because of higher transactions value and better collection efficiency.

Accounting for VAT from additional spending, estimated at 24.6 billion, which was due to additional take-home pay as a result of lower personal income taxes, TRAIN revenue has far exceeded its target, providing additional public resources for infrastructure and human capital development programs, the SERG report stated.

The DOF previously estimated that the implementation of TRAIN gave a combined P12 billion per month in additional income to the country’s individual taxpayers, most of them compensation earners, and in unconditional cash transfers to the poorest households and senior pensioners.

With TRAIN, taxpayers with a net taxable income of P250,000 and below are exempted from paying personal income taxes. Those earning less than P8 million annually also get PIT cuts under TRAIN.

Assistant Secretary Antonio Lambino II, who is DOF spokesperson, said the notable increase in retail sales–in malls, restaurants, and other dining places–after the law took effect in January 2018 indicates the higher purchasing power of consumers as TRAIN put more money into the pockets of 99 percent of Filipino income taxpayers.

He said that retail giants and fast food chains such as Robinsons Retail Holdings Inc., Philippine Seven Corp., Puregold Price Club, and the Max’s Group Inc. have all reported increases in sales in 2018 after the implementation of TRAIN started.

“The significant growth in sales reported by retail establishments and restaurants point to the fact that people now have more money to spend as a result of the hefty PIT cuts under TRAIN, which is now benefiting 99 percent of our taxpayers,” Lambino said.

For the first three quarters of 2018, Lambino said Robinsons Retail Holdings Inc. posted a 9.8 percent growth in its profits with its net sales rising by 13.1 percent to P91.8 billion.

Lambino said the company attributed the increased take-home pay of consumers under TRAIN as among the major factors contributing to its profit growth from January to September of 2018.

Philippine Seven Corp, which licenses the 7-Eleven convenience stores, likewise posted a higher net income of P735 million during the first three quarters of 2018, up by 13.4 percent from P648 million posted during the same period a year ago. Revenues also rose 22.6 percent to P32 billion from P26 billion a year ago.

Lambino said the 7-Eleven operator also pointed to TRAIN’s additional take-home pay as a reason behind the increase in sales despite price hikes.

He also cited Puregold Price Club, Inc., which reported net income growth of 18.8 percent in the first three-quarters of 2018 to P4.6 billion. Its consolidated net sales increased 14 percent to P99.8 billion.

According to media reports, Puregold claimed it benefited from higher consumer spending owing to increased levels of take-home pay since TRAIN was implemented last year.

Among the listed companies that have reported higher earnings in the first three quarters of 2018 was the Max’s Group Inc., whose net income rose 7.1 percent during that period. Among the company’s brands are Max’s Restaurant, Pancake House, Krispy Kreme, Teriyaki Boy, Le Coeur de France, Dencio’s, and Jamba Juice.

Citing company disclosures and Bloomberg data as sources, Lambino also said that in the first to third quarters of 2018, sales of fast food chains also rose, with McDonald’s reporting growth of 10.7 percent and Jollibee at 21.5 percent.

Among real estate developers, from January to September of 2018, Sta. Lucia Land reported sales growth of 13.2 percent; Rockwell Land, 15.8 percent; Ayala Land, 27.3 percent; Megaworld, 11.9 percent; SM Prime, 15.3 percent and Century Properties, 77.4 percent.


-oOo-

Date Posted May 9, 2019

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