DoF wants additional tax bills certified as urgent

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By Melissa Luz T. Lopez, Senior Reporter

THE Department of Finance (DoF) is eyeing to certify as urgent the second set of tax-related measures in order to realize the P130 billion additional revenues expected from the first package of reforms, despite a looming legal battle on the new tax regime.

Finance Secretary Carlos G. Dominguez III said they will ask President Rodrigo R. Duterte to certify the remaining parts of the first package of the Tax Reform for Acceleration and Inclusion (TRAIN) law as urgent, which will fast-track its passage in Congress.

The measures include the estate tax amnesty, general tax amnesty, the relaxation of the deposit secrecy law, and the automatic exchange of information. These are geared towards attracting more Filipinos to settle outstanding dues, while also giving tax collection agencies leeway to go after tax evaders.

“[O]nce the committee report is out then we can certify it, so we will get ready for that,” Finance Undersecretary Karl Kendrick T. Chua told reporters on Thursday afternoon.

To recall, Malacañang previously certified the TRAIN bill in May last year, which allowed the House of Representatives and the Senate to forgo the three-day waiting period to approve the measure on second and third readings.

Mr. Chua explained that the fresh round of discussions will take place in the Senate, as the House version of the TRAIN bill already included these provisions.

RA 10963 is expected to generate P89.9 billion in additional revenues in 2018, short of the P130 billion originally programmed under the national budget. It reduces personal income taxes for those earning below P2 million, alongside a simpler system for computing donor and estate taxes.

Foregone revenues will be offset by the removal of some exemptions to value-added tax; increased tax rates for fuel, automobiles, tobacco, coal, minerals, documentary stamps, foreign currency deposit units, capital gains for stocks not in the stock exchange, and stock transactions; and new taxes for sugar-sweetened drinks and cosmetic enhancements.

Passing the remaining tax measures — which have now been dubbed as Package 1B — will yield the P38.9 billion balance.

“Once they file the committee report, the Senate will tackle it in plenary and then it goes to the bicam,” Mr. Chua added, referring to the bicameral conference committee.

Another measure under the second batch is the increase in the Motor Vehicle Users Charge, which will mean higher registration fees for cars.

The DoF is holding on to a commitment made by chamber leaders to approve these bills within the first quarter.

For his part, Mr. Dominguez said it would be too early to tell which state programs would be left without funding if the second batch of measures are not implemented, noting current revenues can fund projects until the “third quarter of the year.”

“We won’t know which ones we will have to postpone until the latter part of this year so that we do not breach the 3 percent,” the Cabinet official added when asked whether government programs will be delayed in the absence of the full P130 billion collections.

Around 70% of the TRAIN proceeds will be spent on infrastructure, while the remainder will be used for social protection programs including cash transfers to the 10 million poorest families to help them cope with rising commodity prices.

Mr. Dominguez also said they do not expect the Supreme Court to heed the call to impose a temporary restraining order on the TRAIN law.

Three militant lawmakers in the House of Representatives asked the high court on Thursday to declare as unconstitutional and stop its implementation on the grounds that their fellow legislators “railroaded” its passage.

Their central argument has been that the House did not have a quorum and vote on the night the bicameral conference committee report on the tax bill was ratified.

DoF’s Mr. Chua said the chamber can “review and ratify” the minutes of the chamber’s Dec. 13 session to check the presence of a quorum and address the issue.

The TRAIN law took effect Jan. 1, and will be reflected on workers’ paychecks starting this month. Succeeding tax packages will also be submitted by the Executive to the legislative mill within the year.