The Department of Finance welcomed Thursday the final version of the first tax reform package despite changes introduced by the members of the bicameral conference committee.
Among the provisions that were not originally proposed by the DOF, but inserted in the final Tax Reform for Acceleration and Inclusion (TRAIN) bill, include the increase in excise taxes on coal, minerals, tobacco, and the introduction of a cosmetic levy.
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 value added tax on coal.
The P10 coal excise tax rate has remained unchanged since 1988 while the local industry has been exempted from paying excise tax since 1976.
Asked if the insertion of the coal tax could pose a legal question later on as this provision did not originate from the lower House, Finance Secretary Carlos Dominguez III said the levy is not considered a new tax.
He said lawmakers only adjusted the three-decade old coal tax rate.
"That issue was never brought up and besides it's not a new tax. Coal is currently taxed at P10 per metric ton so it is actually only adjustment of a tax already existing," Dominguez said.
"I think what that [Constitution] refers to is a totally new tax cannot be introduced other than by the House of Representatives, however, if the tax already exists, they can adjust it," he added.
Aside from coal, the final bill also doubled the tax rates of all non-metallic minerals and quarry resources, as well as metallic minerals including copper, gold and chromite from the current 2 percent to 4 percent; and on indigenous petroleum from the current 3 percent to 6 percent.
The lawmakers also decided to increase the rates of the tobacco excise tax from the present P30 per pack to P32.5 in the first half of next year and to P35 starting July 2018 to December 2019.
Between 2020 and 2021, the tobacco excise taxes will further rise to P37.5 and from 2022 to 2023, the rate will increase to P40.
From 2023 onwards, the levy on cigarettes will jump 4 percent annually.