THE SENATE successively approved on second as well as final reading late yesterday afternoon the first of up to five tax reform packages of the administration of President Rodrigo R. Duterte, putting this flagship program on track to implementation as 2018 opens in order to help finance an P8.44-trillion infrastructure development plan till 2022.
Senate Bill No. 1592 — sponsored by Senator Juan Edgardo “Sonny” M. Angara, chairman of the Senate Ways and Means committee — was approved with 17 affirmative and one negative vote.
The House of Representatives approved its version, House Bill No. 5636, on March 31 after that measure was filed in the chamber in January. The Finance department (DoF) submitted its draft to Congress in September last year.
In one of its last amendments, SB 1592 added a provision that doubles the excise tax rate for non-metallic minerals and quarry resources to four percent from two percent currently. “Excise tax rates on metallic and non-metallic minerals and quarry resources were last amended through Republic Act No. 7729 of 1994,” read a brief provided by Mr. Angara’s office.
In the wake of news of this latest amendment, introduced last Monday night, the mining and oil sectoral index performed the worst among the Philippine Stock Exchange’s (PSE) six sub-indices, dropping 615.65 points or 5.07% to 11,526.59.
SB 1592 already also increases the coal excise tax from P10 per metric ton (/MT) currently to P100/MT in the first year of implementation, P200/MT in the second year and P300/MT starting the third year.
Ronald S. Recidoro, executive director of the Chamber of Mines of the Philippines, said in a telephone interview that he “cannot comment yet” as the group has yet to study the final version.
SB 1592 also doubles prevailing documentary stamp tax rates on bank checks (to P3 from P1.50), sale or transfer of shares of stock (to P1.50 from P0.75), certificate of profit or interest in property transactions (to P1 from P0.50); increases the final tax on foreign currency deposit units to 15% from 7.5% and the capital gains tax for stocks not traded on the PSE to 15% from 5% or 10% currently; and imposes a 10% excise tax on cosmetic procedures “and body enhancements undertaken for aesthetic reasons”.
The donor’s and estate tax systems will also be simplified, with current rates reduced to a flat six percent of net donations for gifts exceeding P250,000 in value and of net value of estate, respectively.
Those add to lower personal income tax rates, whose projected foregone revenues will be offset by bigger collections from reduced value added tax exemptions, higher excise taxes on cars and on oil products, as well as an excise levy on sugar-sweetened drinks except milk, coffee as well as fruit and vegetable juice.
SB 1592’s approved version cuts to P130 billion projected revenues for the first year of implementation from P159.5 billion just last week, as well as compares to HB 5636’s P119.4 billion and the DoF proposal’s P149.6 billion. — Arjay L. Balinbin