THE bicameral session reconciling the House and Senate versions of the Tax Reform for Acceleration and Inclusion (TRAIN) program approved the tax-exempt ceiling of P250,000 in annual income, among others, while deferring decisions on more contentious matters.
Sen. Juan Edgardo M. Angara, who chairs his chamber’s committee on ways and means, said in a radio interview on Sunday that discussions Friday were moving forward, and “when there is a matter that we cannot agree on we move on and defer action.”
The Friday meeting resulted in both houses approving the P250,000 income ceiling for tax-exempt individuals and the P8 million threshold for the top income tax bracket to be taxed at 35%.
Both sides also approved a four-page income tax return form and electronic filing for easier compliance, a value-added tax (VAT) exemption for lease and condominium dues at a maximum of P15,000 per month, and an estate tax rate reduction to 6%, down from 20%.
“We agreed on the income tax exemption. Our law on income tax has not been amended for 20 years. If we look into the law, those who do not pay income taxes are the jobless and minimum wage earners. In Metro Manila, the minimum wage is P512, which is around P10,000 or P11,000 a month or around P140-144,000 a year,” Mr. Angara said.
Mr. Angara said the committee decided to defer action on the proposal to exempt from tax 13th-month pay and other bonuses. The Senate version sets an P82,000 exemption threshold while the House draws the line at P100,000.
Other deferred provisions that will be tackled at the next bicameral meeting Tuesday are the optional 8% tax rate for the self-employed and professionals, the quarterly filing of VAT and percentage tax instead of monthly, a 15% tax on foreign currency deposits and capital gains for non-listed shares, a VAT exemption on the sale of houses outside Metro Manila worth a maximum of P2 million, and bank secrecy provisions.
Mr. Angara said in a separate interview on Friday that other deferred items were the increased excise tax on the sale of automobiles, fuel, and sugar-sweetened beverages.
“I see long debates (on these three issues). We are dealing with comprehensive tax reform, so a difference in views is unavoidable.
Senate President Pro Tempore Ralph G. Recto said in a chance interview on Friday that he expects the bicameral committee to tackle the “most sensitive” provisions involving the so-called “D and E,” or low-income sectors.
“There are many issues to tackle. You’re lifting the exemptions of the NGCP (National Grid Corporation of the Philippines), so there will be a hit. Question is, do you want to lessen the impact. Because for sure, the bill will be passed. So that is the role of the Senate, to lessen the impact on consumers.”
Mr. Recto said: “The DoF (Department of Finance) wants its version, (but it will hit the) D and E,, which is 91, 93% of the population.”
“You can look at it this way: the tax reduction will be paid by the D and E. If you think of it that way, remember, we’re giving away P140 billion in income taxes, and we’re taking back P280 billion gross from the public. Most of them are D and E. That’s why we introduced certain amendments here. For example, documentary stamp tax. The D and E will not be affected by it, unlike oil prices or sugar. Our job is to lessen the impact, to adopt a tax that’s fairer,” Mr. Recto said. — Arjay L. Balinbin