The Department of Finance (DOF) claimed it took less than 90 days to complete the first package of its proposed comprehensive tax reform program (CTRP) last year, envisioned to be a “game-changing” tool in sustaining high and inclusive growth.
In a statement on Wednesday, the DOF recalled it began the process of making the tax system fairer, simpler and more efficient and less burdensome for the low- and middle-income Filipinos, by submitting to the Congress on September 26 the first package of the CTRP.
‘In the medium-term, tax reform is expected to help reduce the poverty rate from 21.6 percent in 2015 to 14 percent by 2022,” Finance Secretary Carlos Dominguez 3rd said.
Package One of the CTRP aims to lower personal income taxes (PIT) from 32 percent to 25 percent over a two-year period, except for the “ultra-rich,” to keep the rates progressive.
The original DOF proposal, which is now being deliberated upon by the ways and means committee of the House of Representatives, exempts 4.7 million taxpayers with a net taxable income of 250,000 and below from paying income taxes.
To offset the revenue loss from lower PIT rates, the DOF has proposed as part of Package One a corresponding set of revenue-compensating measures that aim to expand the value-added tax (VAT) base and restructure the excise taxes on fuel and automobiles.
The proposal also earmarks a quarter to a third of the revenue generated from the fuel excise tax adjustments to targeted, direct transfer programs for senior citizens and other vulnerable sectors.
“The general rule in crafting the Duterte administration’s income tax reform plan is that the rich will have to pay more while poor and low-income Filipinos will pay less or none at all,” Dominguez said.
“At the same time, society’s vulnerable sectors will be protected through highly targeted subsidies such as the conditional cash transfer program. We will ensure that the ordinary workers and the bottom 50 percent of households will be fully protected through social protection programs,” he added.