Some 6 million Filipinos earning P250,000 and below who comprise 83 percent of the base for individual taxpayers will no longer pay the personal income tax (PIT) under the proposed Tax Reform for Acceleration and Inclusion Act (TRAIN) that was approved last week by the House of Representatives.
Of this number, some 28 percent or 2 million are minimum-wage earners, who are already exempted from the PIT, and 55 percent or 4 million more are those earning above the minimum pay but not over P250,000 per year.
These are preliminary estimates as the Department of Finance (DOF) is still getting final data from the Bureau of Internal Revenue (BIR) and recomputing actual revenue take based on the TRAIN bill approved by the House last May 31.
This means compensation earners with a monthly income of P21,000 and below will pay zero income tax once the tax reform package is enacted by the Congress and becomes a law.
TRAIN or House Bill 5636, the first package of the Duterte administration’s Comprehensive Tax Reform Program (CTRP), was approved by the House of Representatives by a 246-9 vote with one abstention last May 31 before the Congress’ sine die adjournment. This bill, which had consolidated the DOF’s original proposal—HB 4774—with 54 other tax-related measures, seeks to make the country’s tax system simpler, fairer and more efficient by slashing personal income tax rates and, to fill up the consequent revenue loss, by adjusting excise taxes on certain products and broadening the Value Added Tax (VAT) base.
It is now the turn of the Senate to tackle this tax reform package when both chambers of the Congress reopen for their Second Regular Session on July 24. Under the Constitution, all tax and appropriation measures must originate from the House, which will then refer its approved bills to the Senate.
Among the key features of the House-approved TRAIN are the following:
On lowering the PIT in its first year of implementation:
· Those with net taxable income (NTI) of P250,000 and below are exempted from PIT;
· Taxpayers with NTI of P250,000-P400,000 will pay 20 percent of the excess of P250,000;
· NTI of over P400,000-P800,000 will pay P30,000 + 25 percent of the excess of P400,000;
· NTI of over P800,000-P2 million will pay P130,000 + 30 percent of the excess of P800,000;
· NTI of over P2 million-P5 million will pay P490,000 + 32 percent in excess of P2 million; and
· NTI of over P5 million will pay P1,450,000 + 35 percent in excess of P5 million On the estate tax:
· A flat rate of 6 percent regardless of the value of the net estate.
On the donor tax:
· A flat 6 percent in excess of P100,000, regardless of whether the donee is a family member/relative or a stranger.
On sugar-sweetened beverages:
· P10 per liter for beverages containing purely locally produced sugar;
· P20 pesos for all other sweetened beverages;
· These rates shall be adjusted once every 3 years after considering the 3-year cumulative inflation rate; and
· Exemptions include plain milk and milk drink products without added sugar, infant formula, 100% fruit or vegetable juice, meal replacement and medically indicated beverages, ground coffee, unsweetened tea
On the automobile excise tax in the first year of implementation:
· Automobiles with a net manufacturer’s price/importer’s selling price of P600,000 will be charged a 3 percent tax;
· Over P600,000 to P1.1 million will be charged P18,000 + 30 percent of the excess of P600,000;
· Over P1.1 million to P2.1 million will be charged P168,000 + 50 percent of the value in excess of P1.1 million;
· Over P2.1 million to P3.1 million will be charged P668,000 + 80 percent of the value in excess of P2.1 million; and
· Over P3.1 million will be charged P1,468,000 + 90 percent of the value in excess of P3.1 million
On excise taxes on petroleum products:
Staggered excise tax increase of P3 per liter in the first year, P2 in the second year and P1 in the third year for the following:
· Diesel and essentials: processed gas, kerosene, diesel fuel oil, LPG, bunker fuel oil
· Gas and non-essentials: lubricating oils and greases, naptha, regular gasoline, premium gasoline, aviation turbo jet fuel
· Exempted are the following: for HB5636, naphtha and LPG when used as a raw material in the production of petrochemical products.
· When the price per barrel of Dubai crude oil in the global market reaches $80 or more the excise tax adjustment will be suspended but not decreased.
As for the VAT, HB 5636 lifted the exemptions specified in special laws, but retained the zero-VAT privileges of senior citizens, persons with disabilities and cooperatives.
Raw food, education and health will remain exempted.
However, as recommended by the DOF, the bill provides for tax administration reforms in the implementation of this tax privilege for cooperatives to plug leakages costing an estimated P6 billion per year in this sector alone.
To help counter the potential revenue loss, Finance Undersecretary Karl Kendrick Chua said the House agreed to the DOF proposals to
1) tighten the definition of cooperatives;
2) allow automatic audit of coops without the need for prior permission from the Cooperatives Development Authority (CDA), and,
3) inclusion of coops in the Tax Incentives Management and Transparency Act (TIMTA) as a way to monitor the implementation of the tax incentives and stop leakages
Chua also made it clear that under the TRAIN bill, the lease of apartment, condo and other residential units with a monthly rental not exceeding P10,000 shall remain exempt from VAT provided that the gross receipts of the lessor is below the VAT threshold of 3 million pesos.
Chua said the DOF hopes that the original features of the TRAIN bill, outlined in House Bill 4774 that was authored by Rep. Dakila Carlo Cua, would be retained when the Senate deliberates on the measure after the Congress opens its second regular session in Chua said the DOF is now recomputing the net revenue take from the House-approved HB 5636 based on the final version approved by the House last May 31.
HB 5636 was passed after President Duterte had certified the bill as urgent, given that it was designed to help provide a steady revenue stream to his government’s ambitious high—and inclusive—growth agenda anchored on record spending on infrastructure, human capital and social protection for the poor and other vulnerable sectors.
In his letter to Senate President Aquilino Pimentel III and Speaker Pantaleon Alvarez, President Duterte said, “The benefits to be derived from this tax reform measure will sustainably finance the Government’s envisioned massive investments in infrastructure thereby encouraging economic activity and job creation, as well as fund the desired increase in the public budget for health, education and social programs to alleviate poverty.”
Finance Secretary Carlos Dominguez III, who had earlier asked the President to certify the tax reform bill as urgent, said in his memorandum to the Chief Executive that this TRAIN bill is “expected to help reduce poverty rate from 21.6 percent in 2015 to 14 percent in 2022, lifting some six million Filipinos out of poverty, and helping the country achieve upper middle-income country status where per capita gross national income increases from $3,500 in 2015 to at least $4,100 by 2022.”
In the same memo, Dominguez told Mr. Duterte of the “dire consequences” of the Congress’ failure to write a tax reform law.
“The government’s strategy to embark on an aggressive expenditure program by raising deficit spending to three percent of the Gross Domestic Product (GDP) would lead to an “unsustainable fiscal position,” which, in turn, could trigger a credit rating downgrade possibly costing the government an extra P30 billion in annual debt servicing and P100 billion more in higher borrowing costs for the public.,” he said.
Financial institutions have welcomed the House approval of the tax reform bill. Deutsche Bank said that “Beyond its fundamental economic benefits, [the tax reform bill’s] passage would send investors a strong signal that the administration has the political will to pass unpopular laws to institute long-term structural economic reforms.”
Nomura said “the timeliness of the vote and the decisive result again underscore the strong priority that Duterte places on the economic reform agenda and his strong control over Congress.” “Apart from the revenue impact from these measures, there are benefits from tax administration reforms to expand the tax base, including the VAT changes,” it added.
In a sign of positive business sentiment for this tax reform package, the Philippine Stock Exchange went up by 90.37 points or 1.15 percent to close at 7,927.49 last June 1, or the day after the House had approved HB 5636 on third and final reading. (DOF)
PDEA Aims to Free Up to 8k Barangays Yearly from Illegal Drugs
Philippine Drug Enforcement Agency (PDEA) Director General Aaron Aquino targets to free 7,000-8,000 barangays per year from illegal drugs, as President Rodrigo Duterte has four years left to fulfill his campaign promise.
“We have a timeline of four years more before the President steps down and we need to clear 7,000-8,000 barangays per year,” Aquino said during a forum on the administration’s “Rehabinasyon” program on the first day of the three-day National Information Convention (NIC) in Davao City on Monday.
Combining the Filipino words for rehabilitation and nation, “Rehabinasyon” aims to take a holistic approach to eliminating the country’s drug problem by putting a premium on the rehabilitation of drug surrenderers, saving the youth from the evils of drugs, and envisioning a drug-free nation with a better future.
The PDEA chief said more than 24,000 barangays have yet to be cleared of illegal drugs. As of Feb. 8, 2018, the Duterte administration has cleared 5,327 barangays of prohibited substances.
Aquino also reported the agency has conducted 85,068 anti-drug operations and arrested 121,087 drug personalities in anti-drug operations.
He pointed out PDEA has seized P19.61-billion worth of evidence from 9 drug laboratories and 179 drug dens.
Aquino added the agency has arrested 454 government workers, including elected officials, and rescued 618 minors.
The PDEA chief also said the agency targets to establish offices in the Philippines’ 13 key ports to stop the entry of illegal drugs in the country, noting that more than 80 percent of illegal drugs in the country comes from overseas.
The PDEA chairs the Inter-Agency Committee on Anti-Illegal Drugs (ICAD) created by President Duterte in March 2017.
ICAD launched the Rehabinasyon program, which features three components: RealNumbers, RealSolutions, and RealStories.
Under these components, initiatives like information dissemination, treatment of drug dependents, livelihood programs, job security, and alternative modes of development will be reintroduced and implemented across the country.
President Rodrigo Duterte won the 2016 elections under the campaign promise to rid the country of illegal drugs and curb corruption in government.
DPWH Resumes Road Repair Works on 7 Roads in Metro Manila
The Department of Public Works and Highways (DPWH) will continue its road reblocking and repairs in the cities of Quezon and Caloocan this weekend.
According to DPWH National Capital Region Director Melvin B. Navarro, the repair and rehabilitation in six (6) major roads in Quezon City and one (1) in Caloocan City covering an area of 2,136.35 square meters will start 11 PM Friday, 16 February 2018.
In Quezon City, reblocking and repair works will be done at the northbound direction of the following roads: Visayas Avenue in front of the Department of Agriculture (DA) outerlane; EDSA between Landers Street to Howmart, 5th lane; Congressional Avenue Extension corner Tandang Sora Avenue, 1st lane; Congressional Avenue from EDSA to Cagayan Street, 3rdlane; Quirino Highway from T. Urbano to Pagkabuhay Road, inner lane; and A. Bonifacio Avenue from Calavite Street to Mariveles Street, middle lane. Also included is the southbound direction of A. Bonifaco Avenue, crossing Sgt. Rivera, middle lane.
Repair works will also be undertaken at the northbound direction of Bonifacio Monumento Circle in Caloocan City.
Motorists are advised to use possible alternate routes to avoid traffic congestion in the affected areas.
Using one (1) day concrete mix, affected roads will fully open 5 AM Monday, 19 February 2018. (DPWH)
Improved Infra, Eased Regulations to Boost Trade, Investments in ASEAN
Member countries of Association of Southeast Asian Nations (ASEAN) need to improve physical infrastructures and streamline regulatory processes in an effort to facilitate trade and investments in the region, according to a report from state think tank Philippine Institute for Development Studies (PIDS).
In a report titled “ASEAN connectivity: The hows and whys,” PIDS information officer Neille Gwen de la Cruz noted that connectivity is important to the region’s continued economic growth and an integral factor to realize the vision of an ASEAN Community by 2025.
ASEAN leaders have adopted the Master Plan on ASEAN Connectivity 2025, which has the goal of achieving a “seamlessly and comprehensively connected and integrated ASEAN that will promote competitiveness, inclusiveness, and a greater sense of Community” by the year 2025.
“Right now, ASEAN is recognized as one of the world’s largest economic zones. Making it easier to transport goods and services, reducing cumbersome processes, or simply opening more ways for people to move around the region would help facilitate the growth of ASEAN SMEs (small and medium enterprises),” said De la Cruz.
Citing an ASEAN Secretariat data, she said SMEs comprise 90 percent of companies in the region and contribute to as much as 60 percent of the region’s gross domestic product, making them the driving force of economic growth in the ASEAN.
“One of the main advantages of having an integrated region is having a seamless trade. Once the means to move from one country to another has been provided, there would be a freer flow of goods, services, and workers within and across the region, bolstering the perception that the region is an attractive market,” she added.
The PIDS report noted that an interconnected ASEAN is also envisioned to promote knowledge sharing and cultural exchange through improved physical infrastructure, streamlined regulatory processes and harmonized procedures and standards.
These are expected to create significant positive impacts on the region’s SMEs, as well as tourism and human resources, among others, it said.
“Promoting ASEAN connectivity will also boost tourism by capitalizing on the diverse history and culture of the region. Easing visa requirements across ASEAN would encourage greater mobility of people,” De la Cruz added.
Challenges Facing Filipinos Overseas Tackled at Global Online Confab
Senior officials of the government and private institutions will tackle different problems and challenges facing overseas Filipinos (OFs), including persistent illegal recruitment, at a global conference for overseas Filipinos to be held here and shown live on YouTube on Feb. 24 and 25.
The “2018 Global Conference of Overseas Filipinos & Livelihood/Investments Exhibition” also aims to help OFs identify which profitable livelihood projects that they can put up back home to secure the financial security of their families.
Between January and November last year, USD28.24 billion (PHP1.41 trillion) were sent home by overseas Filipinos through banking channels, according to data of the Bangko Sentral ng Pilipinas.
Despite their huge earnings, many OFs have not put up sound investments, with scores still taking risks with illegal networking schemes.
“While overseas Filipinos are often hailed as modern heroes (bagong bayani) for sending home over USD20 billion a year, it is ironic that they are beset by numerous problems. This global conference aims to tackle these problems and help identify solutions to them with the assistance of government and private institutions,” said Alliance of Overseas Filipinos for Change (AOFC) President Juanito Concepcion.
Investments and livelihood are, therefore, a major focus of the conference organized by a Hong Kong-based NGO, AOFC, with LINKPAD Inc. in Manila as its secretariat and marketing arm.
Further details about the event and sponsorships can be obtained from LINKPAD at (02) 734-6300, (02) 788-6521, and (02) 500-0040, 0908-6199582; 0917-5932000 or at email@example.com.
Up to 10,000 overseas Filipinos gathered in Hong Kong, Japan, Singapore and in different other countries in Asia, the Middle East, Europe and North America are expected to watch online this conference that will be shown live on YouTube and Facebook Live. (PR)
About 500 local participants — comprised of visiting OFs, OFs who have returned home for good, family members of OFs, officials of government agencies and private institutions relevant to OFs and other migration and development stakeholders — are also attending the conference.
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