Malacañang on Tuesday said the tax reform package, or the Tax Reform for Acceleration and Inclusion (TRAIN) bill that President Rodrigo Duterte signed into law would spare 99 percent of Filipinos from paying income taxes.
In a Palace briefing, Presidential Spokesperson Harry Roque said that this is because the priority tax reform bill of the Duterte administration exempts those who have an annual income of not more than PHP250,000 would now be tax-exempt.
Citing salient provisions from the soon-to-be enacted TRAIN bill, Roque said that among those exempted include minimum wage workers, clerks and call center agents.
Under the present tax scheme, clerks with monthly salary of PHP15,000 pay PHP 7,000 in income taxes while call center agents who earn PHP21,000 monthly pay PHP22,000 in taxes.
Public hospital doctors would also get a tax reduction under TRAIN.
Currently, a public hospital doctor with a PHP57,000 monthly salary pay PHP138,000 in taxes.
“Now, he will only pay PHP90,000 or a savings of PHP 48,000,” Roque said.
In the meantime, there is also a provision for simplified taxes for small and micro taxpayers.
“And that is a payment of a flat tax of eight percent on gross sales in lieu of income and percentage tax,” he said.
The Palace spokesperson said that value-added tax was also modified to make it fairer to everyone.
The TRAIN bill exempts small businesses with total annual sales of PHP3 million and below from value-added tax or VAT.
This provision is vital for the growth of small businesses as small and micro enterprises represent 98 percent of all registered businesses in the country.
Prescription drugs for diabetes, high cholesterol, and hypertension will be also VAT-free starting 2019 while purchases of senior citizens and people with disability continue to be exempted from VAT.
Roque said that the increased coal excise tax, which had generated a lot of debates, would translate only to a very small increase in terms of the price of electricity.
The excise tax on coal was increased from PHP10 per metric ton to PHP150 per metric ton in a span of three years in PHP50 increments starting 2018.
“I was told – a computation has been made that with PHP9 per kilowatt hour, the impact on Meralco electricity price of coal is just two centavos per kilowatt hour,” Roque said.
According to computations, those consuming 100 kilowatt hour per month will only pay an additional PHP15 per month on top of the current PHP 780 they are paying.
Those consuming 200 kilowatts per month, who are paying PHP1,920 per month, will only pay an additional PHP 30; while those consuming 300 kilowatt per hour and pays PHP2,970 per month will only pay an additional PHP 45.
The bill also provided for varied tax increases in petroleum products, while keeping to a minimum the increase in liquefied petroleum gas (LPG), diesel, and gasoline.
The bill spread the PHP3 rate increase for LPG over three years—a peso per year increase from 2018 to 2020.
The proposed increase in diesel and bunker fuel will also be collected in 3 tranches: PHP2.50 in 2018, PHP 4.50 in 2019 and PHP6 in 2020.
To cushion the impact of indirect taxes, the Palace spokesman said that there is cash transfer provided in the law itself.
“Ten million households will receive cash transfer of PHP200 per month in 2018 and PHP300 per month in 2019 and 2020,” Roque said.
He said the cash transfer would be implemented using the Conditional Cash Transfer (CCT) or 4Ps infrastructure already in place.
Other salient provision of the TRAIN bill included lower estate taxes, higher excise tax for automobiles, excise tax for sugar-sweetened beverages, higher mining excise tax, and higher excise tax for tobacco products.
Roque said the TRAIN bill hopes to generate around PHP120 billion in additional government revenues with 70 percent earmarked for the administration’s infrastructure program and 30 percent for social services. (Jose Cielito Reganit/PNA)