Senate President Aquilino Pimentel 3rd has filed a counterpart measure to the Duterte administration’s pending tax reform bill in the House of Representatives, noting the proposal’s role in raising sufficient revenues for the government’s public investment program and plugging value added tax (VAT) leakages that he estimated to reach P90 billion a year.
Pimentel, in a statement, said his own tax reform measure, Senate Bill (SB) 1408, will help the Duterte administration in funding its “Ambisyon Natin 2040” agenda, which aims to eradicate extreme poverty in the country within one generation from now.
SB 1408 is similar to House Bill 4774 filed by Quirino Rep. Dakila Carlo Cua, who heads the House ways and means committee that is hammering out a refined version of the first package of the Comprehensive Tax Reform Program (CTRP) of the Department of Finance (DOF)
Both bills aim to lower personal income tax rates and enhance revenue collection to make up for an expected reduction in tax collections resulting from hefty PIT cuts.
Their accompanying tax reforms include adjusting excise taxes on fuel and automobiles and broadening the VAT base by limiting exemptions to raw food and other necessities such as health and education while keeping the current zero-tax privileges of senior citizens and persons with disability.
As in HB 4774, Pimentel’s bill also aims to set a uniform rate for taxes on property transfers by proposing a flat rate of six percent for both estate and donor taxes.
SB 1408 eyes a net gain of P100 billion in the first year of its implementation, which will be “earmarked for investments in infrastructure, education and healthcare.”
Pimentel said reforms in personal income taxation are long overdue as PIT rates have remained unchanged since the effectivity of the National Internal Revenue Code in 1997, “despite an increase in the rates of minimum wages, consumer price index and the standard costs of living.”
Earlier, DOF Secretary Carlos Dominguez 3rd hailed the move of the Cua panel before the Lenten congressional break to “approve in principle” the first phase of the CTRP as outlined in HB 4774.
Dominguez said the CTRP bill would “enable the government to make the country’s tax system more progressive, especially for low- and middle-income earners, and at the same time generate sufficient revenues for unmatched higher spending on infrastructure; on education, health and other forms of human capital development; and on social protection for the poorest Filipinos to cushion the initial impact of the proposed adjustments in consumption taxes.”