New tax reforms won’t be introduced until after Congress acts on a first set of measures, which the Finance department still expects to be approved before the end of the year.
“I think we should finish the package one first before we discuss the package two; probably we will move it three months down, so by January,” Finance Secretary Carlos Dominguez 3rd told reporters.
Earlier this month, he said the department would submit the second of an expected five packages under the Comprehensive Tax Reform Program (CTRP) to Congress before the end of the year.
The second set will call for the lowering of the corporate income tax to 25 percent from 30 percent and rationalizing fiscal incentives for businesses. In terms of revenue potential, the Finance department has said that package two would be neutral.
“I think it is better for us to concentrate on the current issues before we discuss another one. So we would much rather discuss that after we finish this package one,” Dominguez said.
Package one was submitted to Congress in September last year. Now called the proposed Tax Reform for Acceleration and Inclusion (Train) Act following revisions at the House of Representatives, it aims to lower personal income taxes, expand the coverage of the value-added tax, raise excise taxes and improve tax administration.
Train, which was approved in May by the House, is currently being tackled at the Senate along with Senate Bill 1408 that contains the original Finance department version.
The Senate has said it was unlikely to adopt the entirety of the government’s first comprehensive tax reform package.
“There’s some changes … But more or less it’s maybe 50 percent to 60 percent or 70 percent of what the DoF (Department of Finance) proposed,” ways and means committee chairman Sen. Juan Edgardo Angara said last week.
Angara said some changes would involve lowering the proposed sugar sweetened beverage tax to P5 from P10 per liter, staggering the implementation of higher fuel taxes and retaining value-added tax exemptions for housing and renewable energy.
The potential revenue from the Senate version, he claimed, would be about P130 billion or about the same as the P133.8 billion estimated by the Finance department.