DoF sees P1.16T net revenue from ‘Train’ bill by 2022

0

The Tax Reform for Acceleration and Inclusion (Train) bill passed by the House of Representatives last week may generate potential net revenue for the government of P1.16 trillion over a five-year period from 2018 to 2022, computations by the Department of Finance (DoF) show.

Advertisements

Total revenue gains are forecast at more than P2 trillion by the end of the term of the Duterte administration, according to the DoF figures.

The House voted for the bill 246-9, with one abstention, on May 31 before the Congress’s adjournment. It is now pending at the Senate for approval.

The Train is a consolidation of the DoF’s original tax reform bill—House Bill 4774—with 54 other tax-related measures. It also includes measures such as additional taxes on items such as automobiles, and sugar-sweetened beverages.

After the bill made it through the Lower House, the DoF announced that in the first year of implementation alone, about P130 billion may be expected in potential net revenue from the Train – the first tax reform package under the broad Comprehensive Tax Reform Program (CTRP) of the Duterte government.

Revenue losses to be offset by other measures

The bill aims to lower personal income tax (PIT) and estate and donor’s tax, but will make up for the consequent revenue loss by plugging tax leakages, limiting value-added tax (VAT) exemptions and adjusting excise taxes on fuel, and improving tax administration.

According to the DoF data, the Act when implemented would involve revenue losses totaling P961.8 billion during the five-year period to 2022.

A breakdown of the total figure shows losses resulting from the reduction of personal income tax would reach P944.9 billion over five years, while losses from lower estate and donor’s tax are seen at P16.9 billion.

However, other measures in the package are designed to compensate for the losses, helping the government to rake in about P2.1 trillion by 2022 in total revenue gains from the approved bill.

Breaking the total revenue figure down shows: P650.9 billion would come from VAT; P658.1 billion from petroleum excise tax; P116.5 billion from automobile excise tax; P259.6 billion from sugar sweetened beverages; and P354.2 billion from tax administration.

Complementary measures such as motor vehicle users’ charges and estate tax amnesty would generate for the government P80.3 billion and P6 billion by 2022, respectively.

Global financial services firm Credit Suisse had said the passage of the first package of the CTRP in the Lower House of Congress was credit-positive for the Philippines because it would address the government’s weak revenue generation.

Credit Suisse also saw the likelihood of a credit rating upgrade for the Philippines from Fitch Ratings if the proposed Train Act makes it through the Senate largely unchanged.

Share.
loading...
Loading...

Please follow our commenting guidelines.

Comments are closed.