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DoF targets tax reform package approval by June

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DoF tax reform

THE DEPARTMENT of Finance (DoF) hopes to have the follow-up “Package 1-B” approved on final reading by both houses of Congress before June 1, after missing its initial first-quarter target.

In a March 27 interview, Finance Undersecretary Karl Kendrick T. Chua told reporters that “the original target that it be passed by both Houses before recess did not happen.”

Asked for the DoF’s new timetable, Mr. Chua said: “They have three weeks when they come back in May before they have recess again on June 1, after that then it will be in July. So (I hope approval happens) in the next session before June 1,” referring to the third and final reading of the bills in both the House of Representatives and the Senate.

The package concerns an estate and general tax amnesty with the easing of the Bank Secrecy Law, and an increase in the motor vehicle user charge — which are follow-up measures to Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) that was enacted on Dec. 19.

Congress will resume its session on May 14, working until June 1, late adjourning between June 2 and July 22.

“1-B is basically, as you know, all the unfinished business of 1-A, because… there was little time,” Mr. Chua said.

The reform package is intended to generate the remaining revenue needed for the TRAIN law to yield P130 billion this year, from the expected P82.3 billion currently.

The general tax amnesty and the relaxation of the Bank Secrecy Law are pending at the committee level in both chambers of Congress, where the legislation is known as House Bill (HB) No. 7105 and Senate Bill (SB) No. 942. The House of Representatives however approved the estate amnesty component, HB No. 4814, in February 2017, but its counterpart measure SB No. 293 has yet to make it out of committee.

Asked to comment on the DoF’s June timetable, Senate ways and means committee chairman Juan Edgardo M. Angara said in a mobile phone message yesterday: “We’ll definitely have it out of committee by then, and hopefully it moves swiftly during plenary debates.” His counterpart in the House, Quirino Representative Dakila Carlo E. Cua, had yet to respond at deadline time.

The motor vehicle users charge (MVUC) legislation on the other hand is pending at the House committee on public works and highways according to Mr. Chua, while the Senate has yet to file a counterpart bill.

Mr. Chua said that the measure has three components, which increase MVUC rates, abolish the Road Board, and make the MVUC fund the responsibility of the Public Works and Highways and Transportation departments.

“In the Senate, Senator [Emmanuel D.] Pacquiao went ahead and filed the one on the fund and the Road Board, but not the one in the increase in the rates. So we are requesting Senate President [Aquilino L.] Pimentel [III] to file the rate legislation,” Mr. Chua said.

Apart from package 1-B, the DoF expects four more tax reform packages to be ratified by Congress before 2019 — an election year — including the ones covering corporate income tax reform, increases in alcohol and tobacco excise taxes, comprehensive fiscal reform for the mining sector, adjustments in property taxation and valuation, as well as the capital income and financial tax reform package.

“Any time there’s an election, the dynamics change that’s why in the first hundred days we filed the first package, and in the first few days of the year we filed the second,” Mr. Chua said. — Elijah Joseph C. Tubayan