Tax bill axes P90B in VAT exemptions


The House Committee on Ways and Means removed P90 billion worth of Value Added Tax (VAT) exemptions under 79 special laws and gave up P6 billion of potential government revenues from taxes on luxury cars in approving the Duterte administration’s tax reform bill dubbed as Tax Reform for Acceleration and Inclusion (Train).

Party-list lawmakers Antonio Tinio of Alliance of Concerned Teachers and Ariel Casilao of Anakpawis made the disclosure a day after the House panel approved the Train bill, which also lowers personal income taxes from 32 percent to 25 percent.

Tinio, who voted no on the measure, said the Finance department is expected to raise P90 billion from the removal of VAT exemptions provided by the 79 special laws covering civic institutions, state universities and colleges and cooperatives, among other sectors.

The bill imposes additional excise taxes on petroleum products, including a P6 per liter excise tax on diesel fuel spread over three years.

“The Finance department’s target revenue from new fuel taxes is P120 billion, and their second largest target revenue will come from the removal of tax exemptions provided by 79 laws which is valued at P90 billion. In fact, there was even a discussion on whether we should be explicit [in the bill]on the repeal of these [79] laws.
Eventually, the wordings [of the bill]were made in general because they don’t want to the public to see the sectors which will be affected,” Tinio told reporters.

“It’s clear that they are hiding something. By lifting the VAT exemptions provided by these 79 laws, this will create a domino effect on all sectors. By not being specific about it, they are avoiding possible backlash,” Casilao said.

Tinio said the Duterte administration’s tax reform proposal is not out to plug the government revenue loss as a result of lowered income taxes but to profit from taxpayers’ money.

While the Finance department estimates that the government will lose P140 billion in revenues from the reduced taxes, he pointed out, it is targeting P250 billion in revenues from the new taxes that are also incorporated in the tax reform bill.

“This [bill]is clearly anti-poor because new taxes will only burden the poor. Fixed income earners will benefit from lowered income taxes, but how about the poor [who don’t enjoy fixed income]?” Tinio said.

He said the Finance department yielded to wishes of car manufacturers in decreasing the initially proposed 200 percent increase in excise taxes for luxury vehicles.

As a result, the department’s expected revenues from additional automobile taxes have gone down to P24 billion from P30 billion.

“We can’t understand why the Finance department would hear the side of the importers and distributors of the luxury vehicles and let go of P6 billion of potential revenues and, yet, they want to remove VAT exemptions on cooperatives which is just P3 billion,” Tinio said.


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