“The tax reform package may be described as the linchpin of the broader reform package envisioned by the Duterte administration.” Philstar.com/File photo
MANILA, Philippines – An administration-backed tax reform package will be submitted to Congress on Monday, with government support ensuring its passage although not likely by the end of the year as targeted.
The first of four packages meant to amend the nearly two-decade-old National Internal Revenue Code will be handed to the House ways and means committee “on Monday, 10 a.m.,” the Department of Finance said on Friday.
“The tax reform package may be described as the linchpin of the broader reform package envisioned by the Duterte administration,” Finance Secretary Carlos Dominguez said in a statement.
Chances are high it will be passed, although at this early, the House committee that will tackle it tried to temper expectations it will be in effect by next year as DOF earlier said.
“Our target is to bring it to the plenary by the end of the year,” said Quirino Rep. Dakila Carlo Cua, ways and means committee chair.
“Definitely, it will be passed, it’s just a question when,” he said in a phone interview.
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As promised by President Rodrigo Duterte during his campaign, the first of four packages aims to lower personal income taxes by restructuring the tax brackets that currently impose a maximum of 32 percent on earnings more than P500,000.
Under the plan, the 32 percent will now be charged for those earning between P3 and P5 million every year, while a new 35-percent levy will be slapped on those with more than P5 million.
To offset revenue losses, excise taxes on oil will be adjusted, with diesel no longer exempted, while exemptions to value-added tax will also be reduced.
Dominguez said a “uniform” excise tax on sweetened beverages worth P10 per liter will also be imposed.
Finance Undersecretary Karl Kendrick Chua said estimated net revenue gain for the package is still being finalized.
“It will be better to look at it once it’s finished. We already promised to submit it (to Congress) early next week,” he said in a separate phone interview.
Other reform packages will follow depending on the progress of the first one. Chua said the second involves lowering corporate income tax rate to 25 from 30 percent and rationalizing fiscal incentives.
Different groups had already thrown their support to the measure.
“Having fair, simple and easy-to-comply tax laws will help improve the ease of doing business in the country and will encourage more local and foreign investments,” the Management Association of the Philippines (MAP) said in a statement.
Last Tuesday, MAP expressed some reservations on the plan, saying reforms should not only make taxes progressive, but also “simple, equitable and efficient.”
For his part, Benedict Tugonon, president of Tax Management Association of the Philippines, said compromises would likely have to be made once Congress discussions begin.
“We also have to understand the reality in legislation. If you lump this together, each item can be a potential cause of delay,” he said by phone.
“We would really like to appeal to the legislature to make sure this is passed and that everybody is part of this important undertaking,” he added.
