Finance Secretary Carlos Dominguez III said his department is set to submit to Congress this month the second package of the Comprehensive Tax Reform Program, after President Rodrigo Duterte signed the first package into law in December.
Duterte signed the Tax Reform Acceleration and Inclusion Act or Train into Republic Act No. 10963 on Dec. 19. The president instructed the DoF to ensure its effective implementation and immediately submit to Congress in early 2018 CTRP’s Package 2, which aims to lower corporate income taxes and modernize fiscal incentives to complement the expected incremental revenues from the first package.
“We are very pleased that the legislature passed the TRAIN bill. The president signed it into law although there are some provisions that he vetoed… We are moving forward with the implementation of the tax reform,” Dominguez said during the recent inter-agency Development Budget Coordination Council meeting.
“We are going to submit to Congress the package two of the CTRP in January 2018,” said Dominguez.
Dominguez said Package 2 would be neutral in terms of revenue potential.
He said the DoF scored its first major legislative victory for the Duterte administration and the Filipino people in 2017 with the approval and signing into law of Train, which would provide hefty income tax cuts for most taxpayers while raising additional funds to support the government’s accelerated spending on its ‘Build, Build, Build’ and social services programs.
Dominguez said 99 percent of the country’s population would benefit from Train, with salaried employees and self-employed individuals earning a taxable income of P250,000 per year, or around P21,000 a month, exempted from paying the personal income tax. Other taxpayers in higher income brackets will also get to enjoy significant PIT cuts, except the ultra-rich or those earning P8 million a year and above.
The 13th month pay and other bonuses amounting to P90,000 a month are also non-taxable.
Dominguez said the substantial cuts in personal income tax, would, in effect, increase the take-home pay of majority of taxpayers, which would boost their disposal income or purchasing power and further stimulate the economy.
Upon signing the Train bill, Duterte said this was just an initial part of the gains under the tax reform program as Congress passed two-thirds of the expected revenues from Package 1 of the measure.
The remaining third involves provisions on the estate tax amnesty, a general tax amnesty, the proposed adjustments in the Motor Vehicle Users Charge and amendments to the Bank Secrecy Law and automatic exchange of information.
About 70 percent of the incremental revenues generated from Train will help usher in the country’s “golden age of infrastructure” under the Duterte watch, he said.
Dominguez said the infra buildup would help reduce transport and production costs, distribute growth and incomes outside Metro Manila, generate quality, meaningful jobs for Filipinos, attract more foreign investments, and further firm up the country’s credit rating and standing before the international community.
Dominguez said 30 percent of the incremental revenues from Train would be earmarked for social protection programs, such as targeted cash transfers to benefit the poorest 10 million households in the country. The social protection program is the biggest, in terms of beneficiaries, to be undertaken by the government.
Cash transfer beneficiaries will get P200 a month during the first year of the program, which will increase to P300 a month in the next two years, and a social welfare card that they can use to receive
discounts on medicine, transportation, rice, and vocational training.