Voting 17-1, the Senate approved Tuesday night on third and final reading the first package of President Rodrigo Duterte’s comprehensive tax reform program, also known as the Tax Reform for Acceleration and Inclusion (TRAIN).
The senators who voted in favor of TRAIN who co-authored it with Senator Sonny Angara are Senate President Aquilino “Koko” Pimentel III, Senate President Pro-Tempore Ralph Recto, Senate Majority Leader Vicente Sotto III, Senate Minority Leader Franklin Drilon and Senators Cynthia Villar, Loren Legarda, Richard Gordon, Juan Miguel Zubiri, Joseph Victor Ejercito, Nancy Binay, Paolo Benigno Aquino IV, Francis Escudero, Joel Villanueva, and Sherwin Gatchalian.
Only Senator Risa Hontiveros, a member of the opposition, voted against the bill.
The House of Representatives had approved on May 31 a counterpart measure of TRAIN.
The Senate version of the measure proposes, among others, tax exemption starting Jan. 1, 2018 for individuals earning P250,000 and below a year.
A media briefer released by the office of Angara, chairman of the Senate committee on ways and means, also enumerated some of the salient points of the Senate version of the bill:
A three-tier imposition of excise tax of P1.75 on fuel and bunker fuel on the first year, P2.00 on the second year and P2.25 on the third year. (The House version seeks to impose a P3 excise tax on the first year, P2 on the second year, and P1 on the third year.)
Impose a two-tier tax scheme on automobiles— 10 percent on price of cars valued up to P1 million and 20 percent for those valued over P1 million.
For sweetened beverages, a 9 percent tax would be imposed for those using high fructose corn syrup and P4.50 per liter for beverages using caloric and non-caloric sweeteners. All milk will be exempt from tax because of its nutritional value and also coffee since it is one of the “most consumed food items of ordinary Filipinos.”
Impose a 10 percent tax on cosmetic procedures and body enhancements undertaken for aesthetic reason.
Retained the VAT exemption of leases below P15,000 per month.
Increase the coal excise tax from P10 per metric ton to P100 per metric ton in the first year of implementation, P200 on the second year, and P300 on the second year.
Double the excise tax rates of all non-metallic minerals and quarry resources, and all metallic minerals including copper, gold, and chromite from the current 2 percent to 4 percent.
After they approved their own versions of the measure, the two chambers will elect their contingent to the bicameral conference committee to reconcile their differences.
Once reconciled, the bicam will come up with a report that will be transmitted back to the two chambers for ratification before sending it to Malacañang for President Duterte’s signature
Angara noted that under TRAIN, 6.8 million workers would be exempted from paying income taxes.
From the current 2 million tax-exempt minimum wage earners, the bill will triple the exempt income taxpayers to around 6.8 million.
For instance, a government Teacher I, with a monthly income of P20,179, now pays P28,717 in taxes annually at a rate of 25%. Under the proposed new tax scheme, he or she will be already exempt and will no longer have to pay taxes. The teacher will be able to take home bigger pay and save P2,393 monthly.
Based on the estimates of the Department of Finance (DOF), the government can generate up to P130 billion additional revenue from the Senate version of TRAIN.
Pimentel said the reforms on tax policy and tax administration are necessary to raise the funds that government would need for its long-term investments on infrastructure, education and healthcare services.
“Like any investments, we must look beyond the short-term challenges this measure poses and focus on the significant, tangible, and long-term benefits that countless Filipinos today, and in the future, will enjoy,” the Senate President said.
Under the Senate-approved tax reform package, 60% of the incremental revenues will go to infrastructure programs, 27% will be allocated to social protection programs including the unconditional cash transfer to the poorest 10 million Filipino families and health, nutrition and anti-hunger programs, while 13% will be allocated to military modernization programs.
The Senate committee conducted numerous and long hours of public hearings and consultations with various stakeholders to come up with a more pro-people tax reform package.
“This is a very comprehensive and ambitious tax reform. We made sure that this long-overdue reform is a product of a collective effort. I thank our colleagues for helping us strike a balance between giving tax relief to our workers and meeting the revenue target so as not to impair the government’s capability to finance its programs and projects,” Angara said.