Line veto to raise projected TRAIN revenue – DBCC

MANILA, Philippines — The tax reform law may generate about P90 billion in revenue for the government after President Duterte vetoes some items from the bill, the interagency Development Budget Coordination Committee (DBCC) said yesterday.

In a press briefing, Finance Secretary Carlos Dominguez, a member of the DBCC, said the President has approved for veto some provisions of the package 1A of the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

However, the finance chief declined to name which provisions were vetoed by the President.

According to estimates by the DBCC, the final tax reform law, before the veto, is projected to contribute a net gain of P82.3 billion in 2018 or the first year of its implementation.

Dominguez said this could go higher to about P90 billion after Duterte signs his veto message.

“Actually, with the veto, we estimate the revenue will go up close to P90 billion, that’s only for (package) 1A,” he said.

Dominguez added the package 1B, which Congress committed to pass by the first quarter of next year, is also expected to yield an additional P38 billion to P40 billion in tax collections.

If combined with package 1A, this will result in as much as P130 billion in incremental revenue for the government, slightly lower than the P134 billion intended revenue gain from the tax reform bill.

The TRAIN Law seeks to simplify the country’s tax system. The signed law provides adjustments in personal income taxes, while increasing the excise tax rates of fuel, automobile, coal, tobacco, and sugar sweetened beverages. It also aims to broaden the tax base by removing some exemptions in the value-added tax system.

The second part of the bill, which will come in the first quarter of next year, covers the proposed tax amnesty program, adjustments in the Motor Vehicle Users Charge, and amendments in the Bank Secrecy Law.

Meanwhile, the DBCC, after its meeting yesterday, adjusted the government’s medium term fiscal program due to the lower than projected revenue from the tax reform package.

“Because we did not get the whole amount right away. Remember, our original amount was P206 billion, and then it went down to P157 billion. We got from the House P134 billion, which is okay. And the main difference between the P206 billion and P157 billion is the tax on fuel, because it’s not P6 (per liter) right away, it’s P3-P2-P1,” Dominguez said.

For 2018, the government’s revenue target was reduced to P2.789 trillion from the current forecast of P2.84 trillion. This corresponds to 16 percent of the gross domestic product, and is seen to rise to P4.388 trillion by 2022.