Senate OKs first package of tax reform program on final reading

by Maila Ager, Inquirer, Nov 28, 2017

Voting 17-1, the Senate has finally passed on third and final reading the first package of the comprehensive tax reform program of the Duterte administration.

Only Senator Risa Hontiveros, an opposition member, voted against the bill also known as the Tax Reform for Acceleration and Inclusion (TRAIN). A counterpart measure was already approved in the House of Representatives last May 31.

“I voted to reject the Senate’s version of the Tax Reform Acceleration and Inclusion (TRAIN) Bill. The TRAIN bill ran out of steam for comprehensive reform. It fell short of its promise to genuinely reform our tax system to make it more equitable and beneficial to poor families, and reshape consumer behavior towards a more health-conscious populace,” said Hontiveros, who stood up to explain her vote.

“Despite the gains in increasing taxes on coal and mining, which I was more than happy to lend my voice and vote to, I feel that not enough care and not enough meticulous effort has been put into making sure that the TRAIN becomes more than just a tally of new revenue flows and another burdensome law to tax the people,” she said.

If the Senate was not in such a rush to get the bill passed, Hotiveros said the Senate would have had enough time “to simmer down, compose ourselves, and see the wisdom” of the proposal to lower the value-added-tax (VAT) rate from 12 percent to 10 percent.

“After all, the lines of exemption are about to be significantly reduced in number. After all, we introduced new revenues from the doubling of rates for documentary stamp taxes. The Senate missed a historic opportunity to lessen the burden of our countrymen and women from this indirect and regressive form of taxation,” she said.

The Senate version of the measure proposes, among others, tax exemption starting January 1, 2018 for individuals earning P250,000 and below a year.

A media briefer released by the office of Senator Sonny Angara, chairman of the Senate committee on ways and means, also enumerated some of the salient points of the Senate version of the bill:

A three-tier imposition of excise tax of P1.75 on fuel and bunker fuel on the first year, P2.00 on the second year and P2.25 on the third year. (The House version seeks to impose a P3 excise tax on the first year, P2 on the second year, and P1 on the third year.)

Impose a two-tier tax scheme on automobiles— 10 percent on price of cars valued up to P1 million and 20 percent for those valued over P1 million.

For sweetened beverages, a 9 percent tax would be imposed for those using high fructose corn syrup and P4.50 per liter for beverages using caloric and non-caloric sweeteners. All milk will be exempt from tax because of its nutritional value and also coffee since it is one of the “most consumed food items of ordinary Filipinos.”

Impose a 10 percent tax on cosmetic procedures and body enhancements undertaken for aesthetic reason.

Retained the VAT exemption of leases below P15,000 per month.

Increase the coal excise tax from P10 per metric ton to P100 per metric ton in the first year of implementation, P200 on the second year, and P300 on the second year.

Double the excise tax rates of all non-metallic minerals and quarry resources, and all metallic minerals including copper, gold, and chromite from the current 2 percent to 4 percent.

“Sa kasaysayan ng pagbubuwis sa bansa, ito na ang pinakamalaking income tax relief na maipagkakaloob natin sa mga manggagawa,” Angara said in a statement after the voting.

(In the history of taxation in the country, this is the biggest income tax relief that we can give to workers.)

“We’re putting more money in the pockets of Filipinos. Gusto nating gawing patas ang ating income tax system na naging hindi makatarungan sa pagdaan ng panahon (We want to make the income tax system fair, which wasn’t fair as time went by),” he added.

After they approved their own versions of the measure, the two chambers will elect their contingent to the bicameral conference committee to reconcile their differences.

Once reconciled, the bicam will come up with a report that will be transmitted back to the two chambers for ratification before sending it to Malacanang for President Rodrigo Duterte’s signature.

Senate Minority Leader Franklin Drilon said the “real battle” would be in the bicam as he expects “tough and tedious” debates on the disagreeing provisions of the measure.

“The bicam could prove to be the real battleground for the passage of the TRAIN because there are numerous disagreeing provisions between the House of Representatives & Senate versions,” Drilon said in a statement issued before the chamber passed the measure.

“The bicam will be difficult. The TRAIN is headed into a tough battle in the bicam,” he added.

Drilon said among the contentious provisions of the measure are the proposed additional excise taxes on petroleum, minerals, coal, and cosmetic procedures.

Reconciling the very different proposals made by the House and the Senate on sugar and sweetened beverages, automobiles, value-added tax (VAT) zero rating and, lifting of VAT exemptions is also expected to be a very arduous task, he said.

Drilon said the Senate version of the bill also contains a provision that would exempt prescription drugs and medicines from VAT. /je