THE bicameral conference committee reconciling tax reform legislation from the House and Senate has agreed on a 6% estate tax rate, among other provisions, according to Senate President Pro Tempore Ralph G. Recto.
In a statement issued by Mr. Recto’s office on Wednesday, “conferees to the panel finalizing the tax reform have agreed to impose a 6% flat tax on estate tax, exempt family homes valued at P10 million, and raise the standard allowable deduction to P5 million.”
The tax reform program, known as the Tax Reform for Acceleration and Inclusion (TRAIN), hopes to rationalize the tax system by reducing income taxes, thereby boosting spending, while also raising more government revenue by eliminating exemptions and encouraging improved compliance in areas such as estate tax payments.
Mr. Recto, in the statement, said “billions in properties left behind by hundreds of thousands of departed Filipinos remain in limbo for the failure of their heirs to pay the estate tax, either for lack of knowledge or lack of money or both.”
The current estate tax has six tiers, with “assets worth P200,000 exempt, with the highest rate slapped on an estate valued at P10 million and up, which will pay P1.25 million, plus 20% in excess of P2 million.”
“The estate tax on the fourth tier, which covers assets in the P2 million-P5 million range is P135 thousand plus 11% in excess of P2 million.”
Mr. Recto said: “At this level, many cannot pay and the property cannot be disposed because titles cannot be transferred. Or it cannot be pledged for bank loans, and cannot be developed.”
The committee also agreed to raise the threshold for tax-exempt family homes to P10 million from P1 million.
“We have decided to increase it… to reflect real estate realities. The current rates were set 20 years ago when homes were a lot cheaper. The P2 million house today is only as large as a matchbox. Why tax that?” Mr. Recto said.
The committee also relaxed the rules on the deceased’s bank deposits, which are automatically frozen upon the death of the account holder.
The bicameral conference committee is composed of Senators Juan Edgardo M. Angara (chair of the Senate committee on ways and means), Ralph G. Recto, Franklin M. Drilon, Loren B. Legarda, Juan Miguel F. Zubiri; and Representatives Dakila Carlo E. Cua (chairman of the House committee on ways and means), Rodolfo C. Fariñas, Sharon S. Garin, Romero Federico S. Quimbo, Gustavo S. Tambunting, Xavier Jesus D. Romualdo, and Danilo E. Suarez.
Mr. Drilon told reporters in a chance interview on Tuesday that the bicameral conference committee report on the tax reform measure is expected to be ratified by the Senate on Monday, Dec. 11.
“We expect to have the bicam report ratified by the Senate on Monday before we adjourn, so we can have (the tax reform law) in place by Jan. 1,” Mr. Drilon said. — Arjay L. Balinbin