THE Senate on Tuesday passed on third and final reading the proposed Tax Reform for Acceleration and Inclusion (TRAIN) bill that seeks to raise revenues to be used for the massive infrastructure projects and allow taxpayers to enjoy higher take home pay.
The measure was 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.
Seventeen senators voted to pass the bill. Only one—Sen.Risa Hontiveros—opposed its approval.
The bill proposes 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.
Taxpayers with an annual income of not more than P250,000 or a monthly income of P21,000 will be exempted from paying income tax.
Sen. Juan Edgardo Angara, chairman of the Senate Ways and Means Committee, said the income tax exemption would mean higher take home pay for about 7.5 million individual income taxpayers.
As for excise taxes in petroleum products, the Senate proposed to impose an excise tax of P1.75 per liter of volume capacity starting 2018, P2 in 2019, and P2.25 in 2020.
However, the imposition of the petroleum taxes could be suspended depending on certain factors, such as the prices of the Dubai crude oil and inflation rate vis-a-vis inflation targets set by the Development Budget Coordinating Council and the Bangko Sentral ng Pilipinas.
Senators also agreed to reduce the rate for liquefied petroleum gas and impose an excise tax of P1 per year until 2019 this is because it is commonly used by Filipino households for cooking.
The Senate also introduced lower taxes for sugar-sweetened beverages but did not impose any tax on all milk (plain milk, infant formula milk, growing up milk; powdered, ready to drink, flavored and fermented milk) as well as 3-in1 coffee mixes.
The House version of the bill imposes a tax of P10 per liter of local sugar and P20 per liter for others. But the Senate lowered the rate 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 will be 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 on raw food/agricultural products, health and education, as well as of senior citizens, PWDs, BPOs, and cooperatives. However, it agreed to increase coal taxes by 3,000 percent or from P10 per metric ton P300.
Angara initially proposed to increase coal tax to P20 per metric ton but Sen. Joel Villanueva during plenary debates proposed that it be increased to P100.
But it was Sen. Loren Legarda’s proposal to have coal taxed P100 for 2018, P200 for 2019, and P300, for 2020 that was approved by the chamber.
All the rates included in the Senate version of the Train bill are not yet final since these will be debated on during the bicameral conference committee.
Meanwhile, the Trade Union Congress of the Philippines (TUCP), expressed its strong opposition to the proposed inclusion of the increase in tobacco sin tax in the first package of TRAIN.
“What the proponents of a radical increase in sin tax fail to recognize is that every time a move to increase tobacco sin tax is proposed, thousands of tobacco farmers and laborers are faced with the threat of losing their primary source of income and livelihood,” the TUCP said in a statement.