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National

House to press passage of comprehensive tax bill

InterAksyon.com
The online news portal of TV5

MANILA, Philippines -- Notwithstanding public criticism, the House of Representatives will push the passage of a comprehensive tax bill that will increase the excise taxes on petroleum products and automobiles, but would lower personal income taxes.

The committee on ways and means began deliberation of House Bill No. 4774, authored by Quirino Representative Dakila Cua on Wednesday.

The Tax Reform for Acceleration and Inclusion or TRAIN aims to “create a tax system that is simpler, fairer and more efficient, characterized by low rates and a broad base that promotes investment, job creation and poverty reduction.”

The measure allows for the adjustment of the personal income tax brackets to correct for "income bracket creeping;" and the reduction of the maximum rate to 25 percent over time, except for the highest income earners to “maintain progressivity, and shift to a modified gross system to simplify the (personal income tax) system.”

“Revenue losses from the PIT reform will be compensated by expanding the VAT base by limiting exemptions to raw food and other necessities (e.g., education and health); increasing excise tax rates on all petroleum products to address negative externalities brought about by congestion and pollution; restructuring and increasing the excise tax on automobiles; and, reducing the estate and donors tax to six percent,” the bill says.

Based on the bill’s tax schedule, the new rate on compensation income earners starting July 2017 and for 2018 and 2019 would be:

  • Not over P250,000 – zero percent
  • Over P250,000 but not over P400,000 – 20 percent of the excess over P250,000
  • Over P400,000 but not over P800,000 – P30,000 + 25 percent of the excess over P400,000
  • Over P800,000 but not over P2 million – P130,000 + 30 percent of the excess over P800,000
  • Over P2 million but not over P5 million – P490,000 + 32 percent of the excess over P2 million
  • Over P5 million – P1.45 million + 35 percent of the excess over P5 million
  • Tax Schedule Effective January 1, 2020 and onwards:
  • Not over P250,000 – zero percent
  • Over P250,000 but not over P400,000 – 15 percent of the excess over P250,000
  • Over P400,000 but not over P800,000 – P22,500 + 20 percent of the excess over P400,000
  • Over P800,000 but not over P2 million – P102,500 + 25 percent of the excess over P800,000
  • Over P2 million but not over P5 million – P402,500 + 30 percent of the excess over P2 million
  • Over P5 million – P1,302,500 + 35 percent of the excess over P5 million

The bill proposes that after 2020, the taxable income levels in the said schedules will be adjusted every five years through rules and regulations issued by the Department of Finance, after considering among others its effect on the five year cumulative inflation rate. 

At present, only minimum wage earners are exempt from paying the personal income tax.  (See the current daily minimum wage rates http://www.nwpc.dole.gov.ph/pages/ncr/cmwr.html)

Those earning between P250,000 and P500,000 need to pay P50,000 plus 30 percent of the excess over P250,000.

Those earning over P500,000 need to pay P125,000 plus 32 percent of the excess over P500,000.

As to the excise tax on petroleum products, the bill proposes a staggered increase effective July 1 this year. The DOF proposal to Congress on the increase in excise taxes would cover the following:

  • Lubricating oils and greases – P7 per liter (from P4.50)
  • Processed gas – P3 per liter (from P0.05)
  • Waxes and Petrolatum – P7 per kilogram (from P3.50)
  • Denatured alcohol – P3 per liter (from P0.05)
  • Naptha, regular gasoline – P7 per liter (from P4.35)
  • Leaded premium gasoline – P7 per liter (from P5.35)
  • Unleaded premium gasoline – P7 per liter (from P4.35)
  • Aviation turbo jet fuel – P7 per liter (from P3.67)
  • Kerosene – P3 per liter (from zero)
  • Diesel fuel oil – P3 per liter (from zero)
  • Liquefied petroleum gas – P3 per liter (from zero)
  • Asphalts – P3 per kilogram (from P0.56)
  • Bunker fuel oil – P3 per liter (from zero)

Starting January 1, 2018, the new rates would be:

  • Lubricating oils and greases – P9 per liter (from P4.50)
  • Processed gas – P5 per liter (from P0.05)
  • Waxes and Petrolatum – P9 per kilogram (from P3.50)
  • Denatured alcohol – P5 per liter (from P0.05)
  • Naptha, regular gasoline – P9 per liter (from P4.35)
  • Leaded premium gasoline – P9 per liter (from P5.35)
  • Unleaded premium gasoline – P9 per liter (from P4.35)
  • Aviation turbo jet fuel – P9 per liter (from P3.67)
  • Kerosene – P5 per liter (from zero)
  • Diesel fuel oil – P5 per liter (from zero)
  • Liquefied petroleum gas – P5 per liter (from zero)
  • Asphalts – P5 per kilogram (from P0.56)
  • Bunker fuel oil – P5 per liter (from zero)

From January 1, 2019, the new rates would be:

  • Lubricating oils and greases – P10 per liter (from P4.50)
  • Processed gas – P6 per liter (from P0.05)
  • Waxes and Petrolatum – P10 per kilogram (from P3.50)
  • Denatured alcohol – P6 per liter (from P0.05)
  • Naptha, regular gasoline – P10 per liter (from P4.35)
  • Leaded premium gasoline – P10 per liter (from P5.35)
  • Unleaded premium gasoline – P10 per liter (from P4.35)
  • Aviation turbo jet fuel – P10 per liter (from P3.67)
  • Kerosene – P6 per liter (from zero)
  • Diesel fuel oil – P6 per liter (from zero)
  • Liquefied petroleum gas – P6 per liter (from zero)
  • Asphalts – P6 per kilogram (from P0.56)
  • Bunker fuel oil – P6 per liter (from zero)

Under the bill, the tax rate for these products will be increased by four percent every year effective January 1, 2010, “unless the average Dubai crude oil price in the month preceding the scheduled indexation exceeds US$100 per barrel.

The excise tax on miscellaneous articles proposed under the bill would also increase the prices of automobiles.

The proposed rates are:

  • Up to P600,000 – The rate would be 4percent from the current 2 percent
  • Over P600,000 to P1.1 million – P24,000 plus 40 percent of value in excess of P600,000 (from the current P12,000 plus 20 percent)
  • Over P1.1 million to P2.1 million – P224,000 plus 100 percent of the value in excess of P1.1 million (from the current P112,000 plus 40 percent)
  • Over P2.1 million – P1.24 million plus 200 percent of value in excess of P2.1 million (from the current P512,000 plus 60 percent)

Finance Undersecretary Karl Kendrick Chua said the increases in the excise tax on petroleum products will “only have a moderate increase in inflation of 1.5 percent on top of the 1.8 percent inflation rate.”

“Once the tax reform (package) is implemented, the inflation rate will be around 3.3 percent,” he said.

But Deputy Speaker Romero Federico Quimbo observed that the proposed tax package did not contain “a single step towards tax reforms,” pointing out that the new taxes, such as the excise tax on petroleum products, will be shouldered mostly by the poor.

Sa tingin ko hindi ito progressive. Pinalaya mo nga sa pamamagitan ng pag-e-exempt nu’ng mga earners ng P250,000 and below, binawi mo naman sa excise tax sa fuel (In my opinion this is not progressive. You did exempt those earning P250,000 and below but take it back through the excise tax on fuel),” he said.

He also noted that oil smuggling, which deprives government of billions of pesos in revenues, has yet to be plugged.

Chua said the House bill includes measures that would improve tax collection efficiency such as mandatory fuel marking and networking establishments to the BIR system for proper monitoring of sales.

He lamented that numerous exemptions (59 VAT exemptions and some 200 special laws outside the tax code) also make tax collection more complicated.

As for the excise tax on petroleum products, he said that the poorest 10 percent will pay only P500 pesos a year or P2 pesos a day. 

READ HOUSE BILL NO. 4774:

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