Tax reform bill hurdles ways and means committee
THE Finance department-backed comprehensive tax reform program (CTRP) has inched closer to House plenary-level deliberations after the ways and means committee gave its final approval on the still-unnumbered substitute reform bill.
Finance Undersecretary Karl Kendrick T. Chua said that there has been “further progress” in the first tax reform package with yesterday’s committee approval.
“There has been further progress in the first CTRP bill with its final approval today by the ways and means committee chaired by Rep. (Dakila Carlo E.) Cua,” said Mr. Chua after Monday’s hearing.
“We are hopeful that the House could pass this bill at the plenary level before the Legislature’s sine die adjournment on June 2. We also hope they will reconsider a number of provisions that were removed from the administration proposal,” he added.
On May 3, the committee only gave provisional approval to the substitute bill by voting 17-4 with three abstentions, and then referred it to the committee on appropriations for earmarking the funding provisions.
With final approval, the committee report on the bill will now be submitted to the House rules committee so that it can be included in the order of business for plenary-level deliberations.
Final approval came after the House committee on appropriations referred the bill back to the mother committee after approving last week the allocation of 85% of the projected P47 billion additional revenue generated by the sugary-drinks tax to a health promotion fund.
The remaining 15% meanwhile will be allocated to programs benefiting sugar farmers who may be affected by any dampening of demand for their product.
The tax on sugary drinks was a separate bill but was eventually added to the first package of the tax reform program.
In a chance interview yesterday afternoon, Rep. Cua, of Quirino, said that his committee adopted the recommendations of the House appropriations committee and will forward the bill to the House rules committee.
“There are no changes on the tax side, more on the earmarking side,” Mr. Cua said when asked about changes on the bill.
Asked if the chamber can approve the measure on third and final reading before the sine die adjournment, Mr. Cua said: “I think we can do it.”
Mr. Cua said that computations on the projected revenue from modified tax reform package are not yet available, saying only that there were no drastic changes to the bill.
“We will come up with our own numbers,” said Mr. Cua.
Meanwhile, Mr. Chua, the Finance Undersecretary, said the substitute bill, which was the consolidated version of the Department of Finance (DoF)-endorsed House Bill No. 4774 and 54 other tax reform measures filed by other lawmakers, retained most of the DoF’s proposals and was approved with only “moderate” changes.
According to the DoF, the key features of the substitute bill include the lowering of personal income tax rates as proposed by the department but indexed to inflation every three years; a flat rate of 6% for the estate and donor’s taxes; broadening the tax base by removing special laws on VAT exemptions, including those for cooperatives, housing and leasing; but retaining exemptions for seniors and persons with disabilities.
Other features include staggered “3-2-1” excise tax increase for petroleum products from 2018 to 2020 but with no indexation to inflation, with 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 the earmarking of 40% 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. -- Raynan F. Javil