Finance Undersecretary Karl Kendrick Chua is hopeful for the passage of the tax reform bill before the House of Representatives adjourns on June 2, citing the measure’s “substantial progress.”
This after the House’s Ways and Means Committee on Wednesday voted to pass a substitute bill based on the original Comprehensive Tax Reform Program bill submitted by the Department of Finance in September last year.
“We will also convince the plenary to include some original provisions that were removed,” he said.
“The team is now estimating the revenue and deficit impact of the substitute measure,” he said.
The Ways and Means Committee, chaired by Quirino Rep. Dakila Carlo Chua, voted to pass the substitute bill on a 17-4 vote with three abstentions.
Last March 13, the Committee approved “in principle” the proposed tax reform bill and ordered for the creation of a Technical Working Group, tasked to draft a substitute bill while Congress was on its Lenten Break. The TWG met four times during the six-week recess.
The DOF said among the key features of the substitute bill were lowering of personal income tax rates as proposed by the DOF but indexed to cumulative Consumer Price Index inflation every three years; a flat rate of six percent for the estate and donor’s taxes; broadening the tax base by removing special laws on value added tax exemptions, including those for cooperatives, housing and leasing, but retaining exemptions for seniors and persons with disabilities.
Other features are staggered “3-2-1” excise tax increase for petroleum products from 2018 to 2020 but with no indexation to inflation, and liquefied petroleum gas used as feedstock to be exempted from the hike; a five-bracket excise tax structure for automobiles with a two-year phase-in period for the tax increases; and earmarking of 40 percent of the proceeds from the fuel excise tax increase for social protection programs for the first three years of the tax reform measure’s implementation.
Chua said threshold for VAT exemptions was hiked to P5 million instead of the earlier proposed Php 3 million threshold. This is being proposed to be indexed to inflation every three years.