The Finance department expects to submit the second package of proposed tax reforms to Congress before the end of the year.
“We are preparing for that. I think we can do it by that time,” Finance Secretary Carlos Dominguez 3rd told reporters on Wednesday when asked about the department’s fourth quarter timeframe.
The second of an expected five packages under the Comprehensive Tax Reform Program (CTRP) will call for lowering the corporate income tax to 25 percent from 30 percent and rationalize fiscal incentives for businesses.
In terms of revenue potential, the Finance department has said that Package 2 would be neutral.
The department remains focused on congressional approval of the first package, which aims to lower personal income taxes, expand the coverage of the value-added tax, increase excise taxes and improve tax administration.
The House of Representative approved the so-called Tax Reform for Acceleration and Inclusion (Train) Act in May as House Bill 5636, consolidating the Finance department’s proposals with other tax measures.
The Senate is currently tackling HB 5636 along with Senate Bill 1408 that contains the original Finance department version.
Also on Wednesday, Dominguez claimed that even non-wage earners who won’t get tax breaks under the Train Act would still benefit. This will come in the form of better infrastructure, more jobs and expanded access to education, health and other social services.
Contrary to claims that 50 percent of the population who are non-taxpayers would be left out, Dominguez said that aside from better living conditions, the tax reform bill would also provide the poor and other sectors vulnerable to its initial impact with cash transfers and other forms of assistance.
“People who are not paying taxes are going to benefit. Why? Number one, they are going to get better roads, they’re going to get better education, they’re going to get better job opportunities. So I want to dispel this notion that people who don’t pay taxes are not going to benefit from the tax reform program,” Dominguez said.
Under the proposed measure, 40 percent of the annual incremental increase from oil excise taxes will go to mitigating measures such as targeted cash transfers for the poorest families, public utility operators and drivers, and electricity consumers in areas not connected to the main power grid.
The balance of 60 percent will be used to fund infrastructure, education, health, housing and social protection projects.