Congress ratifies tax reform bill

ABS-CBN News

Posted at Dec 14 2017 12:35 AM | Updated as of Dec 14 2017 12:38 PM

(4th UPDATE) Congress on Wednesday night ratified the Tax Reform for Acceleration and Inclusion (TRAIN) bill despite objections from several lawmakers and senators, a lawmaker said. 

In the Senate, 16 senators voted to adopt the bicam-approved tax reform package that seeks to reduce the income tax rate of individual income earners.

Four senators who voted against the bill were Bam Aquino, Panfilo Lacson, Risa Hontiveros, and Antonio Trillanes IV.

Aquino objected to the proposed tax measure because he believes it will only put more burden on the poor.

Hontiveros said the reconciled version of TRAIN failed to reform the tax system needed by Filipinos and is not enough to protect the poor.

Several senators who voted for it, including Senators Joel Villanueva and Joseph Victor "JV" Ejercito, said they had "strong" apprehensions. 

Ejercito had misgivings on fuel tax that will affect ordinary Filipinos.

Villanueva expressed dismay over the sudden removal of a provision in the bicameral report of the TRAIN bill requiring local coal producers to pay excise tax.

FINAL VERSION

However, the Senate Committee on Ways and Means, in a media briefer Wednesday night, said the bicam-approved final version of the TRAIN bill raised the coal excise tax rate from P10 per metric ton to P50 per metric ton in the first year of implementation, P100 in the second year, and P150 in the third and succeeding years.

It said the P10 coal excise tax rate has remained unchanged since 1988 while the local industry has been exempted from paying excise tax since 1976.

The bicam-approved final version did not have VAT on coal, according to the media briefer. 

An ABS-CBN News source privy to the proceedings said the bicam report jointly developed by the Senate and House contingent as of 2 a.m. on December 12 had domestic and imported coal being subjected to excise taxes and value-added taxes. 
 
However, an updated bicam report as of 4 p.m. December 12 that was being circulated for signing had no excise taxes and no VAT on domestic coal, the source added. 

By 8 p.m. on December 13, the bicam report had local coal exempted from VAT but will will have to pay excise taxes, the source said. 

According to the source, senators insisted on same treatment on domestic and imported coal while lawmakers from the Lower House insisted on continued incentives introduced 42 years ago and VAT-free domestic coal.

OTHER TAX CHANGES

The briefer also said bicam-approved TRAIN bill reduced the income tax rates of 99% of the 7.5 million individual income taxpayers: 
 - Exempted the first P250,000 annual taxable income, and raised the tax exemption for 13th month pay and other bonuses to P90,000.
 - 6.8 million individual income taxpayers will be exempt from paying taxes
 - Further reduced income tax rates starting 2023.
 
For self-employed and professionals, the approved bill introduced an 8% flat tax—in lieu of income tax and percentage tax to be filed once a year—on gross sales or receipts. Those earning P250,000 and below will be exempt from income tax, and those with gross sales or receipts of P500,000 and below will be exempt from 3% percentage tax.

Marginal income earners, such as farmers and fisherfolk, sari-sari store and carinderia owners, market vendors, and tricycle drivers will also be exempt from paying taxes just like minimum wage earners. 

The briefer also showed a reduced and simplified estate tax to a flat tax rate of six percent based on the net value of the estate. There is also an increased allowable bank withdrawals to help heirs settle expenses relating to the passing of decedent.

The donor's tax will also be reduced to a flat tax rate of six percent on net donations for gifts exceeding P250,000 regardless of relationship between donor and donee.

The bill will also impose an excise tax on sweetened beverages except on milk, coffee, and natural fruit and vegetable juices.

Beverages using caloric and non-caloric sweeteners will be taxed for P6 per liter while beverages using high fructose corn syrup will be taxed P12 per liter.

Under the TRAIN bill, the sale of drugs and medicines prescribed for diabetes, high cholesterol, and hypertension will be VAT-free starting 2019.

Socialized housing worth P450,000 and below and low-cost housing amounting to P3 million will continue to enjoy VAT exemption for the next three years.

To encourage greener and cleaner transportation, electric vehicles will be exempted from tax. Hybrid cars, on the other hand, will be taxed at half the rates.

Under the bill, lawmakers decided to increase the rates of the tobacco excise tax to P32.5 from the present P30 per pack in the first half of next year, and to P35 starting July 2018 to December 2019.

A five percent tax will also be imposed from invasive cosmetic procedures, surgeries, and body enhancements aimed at improving, altering, or enhancing the patient's appearance. 

'LACK OF QUORUM'

At the Lower House, the ratification came through despite objection for supposed lack of quorum.

ACT Teachers Partylist Rep. Antonio Tinio said the number of House members present on the floor was not enough to constitute a simple majority. But the presiding officer proceeded to ratify the bill.

“Sagasa talaga. May quorum ba dito? Wala pa yatang sampung tao iyung nasa floor. Hindi ito ordinaryong batas,” Tinio said.

Under the bill, lawmakers decided to increase the rates of the tobacco excise tax to P32.5 from the present P30 per pack in the first half of next year, and to P35 starting July 2018 to December 2019.

A five percent tax will also be imposed from invasive cosmetic procedures, surgeries, and body enhancements aimed at improving, altering, or enhancing the patient's appearance. - with reports from Miguel Dumaual and Vivienne Gulla, ABS-CBN News