THE Senate, voting 17-1, passed on third and final reading on Tuesday the proposed Tax Reform for Acceleration and Inclusion (TRAIN) bill that would not only provide government the needed revenues for its massive infrastructure projects but would also allow taxpayers to enjoy higher take home pay.
The TRAIN is the first package of the comprehensive tax reform program envisioned by President Rodrigo Duterte as a vital component of his administration’s Build, Build, Build program.
The bill is proposing additional excise taxes on petroleum, minerals, coal, and cosmetic procedures, lifting of value added tax (VAT) exemptions and providing higher income tax exemption for Filipinos.
Under the Senate version, taxpayers with an annual income of not more than P250,000 or P21,000 monthly will be exempted from paying income tax.
Sen. Juan Edgardo Angara, chairman of the Ways and Means Committee, said the exemption would mean higher take home for about 7.5 million individual income taxpayers.
As for the excise tax on petroleum products, the Senate proposed to spread it over three years: P1.75 per liter of volume capacity in 2018, P2 in 2019, and P2.25 in 2020.
The imposition of the petroleum taxes may be suspended depending on the prices of the Dubai crude oil and the inflation rate vis-a-vis inflation targets set by the Development Budget Coordinating Council and the Bangko Sentral ng Pilipinas (BSP).
Senators also agreed to reduce the rate for liquefied petroleum gas (LPG) and impose excise tax of P1 per year until 2019 because the LPG was commonly used by Filipino households for cooking.
The original proposal of the Department of Finance (DoF) was a P6 increase straight out while the House version provided for a graduated implementation of 3-2-1.
The Senate also introduced lower taxes for sugar-sweetened beverages but excluded all milk products (plain milk, infant formula milk, and growing up milk; and powdered, ready to drink, flavored and fermented milk), as well as 3-in1 coffee mixes.
The House version of the TRAIN bill proposed P10 per liter for local sugar and P20 per liter for others. But the Senate lowered the price to P4.50 per liter for beverages using caloric and non-caloric sweeteners, and imposed a tax of P9 per liter for beverages using high fructose corn syrup.
Small businesses with total annual sales of P3 million and below are exempted from paying VAT under the Senate version of the TRAIN bill that increased VAT threshold from P1.9 million to P3 million.
The Senate also retained the VAT exemption of raw food/agricultural products, health and education, as well as of senior citizens, PWDs (Persons with Disabilities), BPOs (Business Process Outsourcing), and cooperatives.
The Senate also agreed to increase coal taxes by 3,000 percent or from P10 per metric ton to P300.
It was Sen. Loren Legarda’s proposal for a graduated increase over three years that was carried by the chamber: P100 for 2018, P200 for 2019, and P300 for 2020.
The approved Senate and House measures will be reconciled at the bicameral conference committee.