TRAIN is coming
We are getting closer to completing the first-ever reform of our country’s tax system in over two decades. Three days into the bicameral deliberations, we are nearing the fruition of the Tax Reform for Acceleration and Inclusion. This will introduce necessary reforms to our country’s tax system, but will also raise revenues that will support the administration’s “Build Build Build” infrastructure development program.
As part of the bicameral conference committee, I took part in the bicameral deliberations for the TRAIN. Finalizing the provisions of the tax reform program is a challenge for both Houses of Congress because of the significant differences in the provisions of the two versions. Good news is, we’re already halfway through the deliberations and we have already agreed on several provisions.
One of the key provisions that the bicameral conference committee has approved is the personal income tax exemption of all workers earning P250,000 a year. This is helpful to our minimum-wage earners who will benefit from use of their full earnings. With the implementation of TRAIN next year, about 6.8 million of the country’s 7.5-million individual income taxpayers will be tax-exempt.
The TRAIN targets to raise P130 billion in government revenue. One of the concerns I raised during the deliberations is my position towards a “revenue neutral” tax reform. This means that the revenue loss from the tax cuts should be offset by the revenue gains from broadening the tax base, increasing excise taxes, eliminating deductions, and other related measures. The government’s gains from the additional taxes should only be equal to its loss from the tax cuts, and should not have further profit.
Contentious provisions include excise taxes on petroleum, coal, minerals, automobiles, sugar-sweetened beverages, and cosmetic procedures. The increased taxes from these items will make up for what the government will lose from the personal income tax exemptions and reductions. I hope that we soon come up with the best tax rates that would be fair for all.
Besides the tax adjustments, the TRAIN also aims to achieve administrative simplicity. The goal is to simplify the process involving filing of taxes to make the procedure less vulnerable to corruption. The bicameral conference committee has already adopted the two-page income tax returns for easier compliance. We are also considering the quarterly, instead of the monthly filing of VAT and percentage tax.
The bicameral conference committee expects to pass the TRAIN before the adjournment of session next week, with target implementation on Jan. 1, 2018. This tax reform program, once implemented, will be one of the greatest milestones in Filipino history. Be assured that the bicameral conference committee has been meticulous in scrutinizing the TRAIN’s provisions to achieve a simplified, efficient and transparent tax system, and assures full accountability across the board.