Senator Paolo Aquino advised consumers to brace for the increase in prices of basic commodities in 2018 due to the Tax Reform for Acceleration and Inclusion that the government recently enacted into law.
“We won’t be surprised by the increase in prices in 2018. This is the reason why I go against TRAIN,” he said.
Aquino’s statement came on the heels of the announcement made by the Industrial Group of Zamboanga that prices of sardines will go up beginning next year due to the excise tax imposed on petroleum products.
Aquino said he rejected the TRAIN's approval due to the inability of government to implement the financial assistance program in time for the increase in prices due to provisions on excise tax on fuel and sweetened beverage tax.
The Department of Finance proposed a cash transfer program with a P200 monthly financial assistance on the first year and P300 monthly financial assistance for the second and third year to help cover the increase in prices of basic goods.
During the period of amendments, Aquino pushed for the immediate implementation of the cash transfer program to help poor Filipinos absorb the expected increase in the prices of goods and services. However, the proposal was not accepted by the DoF.
“In the end, poor Filipinos will bear the brunt of this tax reform program as it will increase the prices of basic commodities without the immediate cash transfer assistance to the poor,” he said.
But for Senator Juan Edgardo Angara, who sponsored TRAIN, the newly enacted tax reform law will make the lives of Filipinos with small businesses easier by not only reducing their taxes, but also by simplifying the tax filing and payment process.
Angara cited the latest Doing Business report of the World Bank where the Philippines’ ranking slipped to 113th this year from 99th last year among 190 countries.
According to the World Bank report, to start a business in the Philippines, a budding entrepreneur would need to make 20 different tax and contribution payments and visit multiple agencies in person. Moreover, the new business would be expected to pay 43 percent of its commercial profits in taxes and contributions annually.
To address this, under Republic Act 10963 (TRAIN), compensation income earners as well as professionals and self-employed individuals with small businesses, whose annual taxable income do not exceed P250,000, are exempted from income taxes and are no longer required to file income tax returns.
At present, even if self-employed and professionals have no tax due, they are still required to file ITRs for record and monitoring purposes of the Bureau of Internal Revenue.
Those with annual gross sales or earnings of above P250,000 but below P3 million can choose between a flat tax of 8 percent or the schedular personal income tax rates where they can deduct their business operation costs and expenses.
Furthermore, the TRAIN law increased the value-added tax (VAT) threshold from the current P1.9 million to P3 million. This means that those earning below P3 million will be exempt from the 12 percent VAT and will be subject to the 3 percent percentage tax only if they opt for the schedular personal income tax rates.
Presently, VAT and percentage tax are filed and paid every month. With the reform, such filing and payment will be made quarterly.
The TRAIN law likewise provided that only those who have annual sales or earnings of above P3 million—from the current P600,000—will be required to have their books of accounts audited by certified public accountants.
The BIR is also mandated to cut the ITR form from the current 12 pages to four pages only.
RA 10963 also clearly states that the BIR commissioner must simplify the business registration and tax compliance requirements of self-employed individuals and professionals.
"We are hopeful that these reforms would not only incentivize our self-employed and professionals to pay correct taxes, but also encourage more Filipinos to engage in business,” said Angara.