Tax reform package 2 to be submitted to Congress this month

MANILA, Philippines — The Department of Finance (DOF) is set to submit the second package of its tax reform program to Congress this month after scoring a major legislative victory with the enactment of the first package last month.

“We are going to submit to Congress the package two of the CTRP this month,” Finance Secretary Carlos Dominguez said.

Dominguez said the second package of the comprehensive tax reform program (CTRP) would be neutral in terms of revenue potential.

The second package aims to lower corporate income taxes and modernize fiscal incentives to complement the expected incremental revenue from the first package.

President Duterte signed Republic Act 10963 or the Tax Reform Acceleration and Inclusion Act (TRAIN) providing hefty income tax cuts for the majority of Filipino taxpayers while raising additional funds to help support the government’s accelerated spending on infrastructure and social services programs.

Upon signing of the landmark law, President Duterte instructed the DOF to ensure its effective implementation and to immediately submit to Congress the second package.

“We are very pleased that the legislature passed the TRAIN bill. The President signed it into law although there are some provisions that he vetoed… We are moving forward with the implementation of the tax reform,” Dominguez said.

Dominguez said 99 percent of the country’s population would benefit from the TRAIN, with salaried employees and self-employed individuals earning a

taxable income of P250,000 per year, or around P21,000 a month, exempted from paying the personal income tax (PIT).

Other taxpayers in higher income brackets will also get to enjoy significant PIT cuts, except the ultra-rich or those earning P8 million a year and above.

Also, 13th month pay and other bonuses amounting to P90,000 a month are non-taxable.

He said the substantial cuts in personal income tax would raise the take-home pay of majority of taxpayers and boost their disposal income or purchasing power and further stimulate the economy.

Congress has passed two-thirds of the expected revenue from the first package of the CTRP while the remaining one-third involves provisions on the estate tax amnesty, a general tax amnesty, the proposed adjustments in the Motor Vehicle Users Charge and amendments to the bank secrecy law and automatic exchange of information.

About 70 percent of the incremental revenues generated from the TRAIN would bankroll major infrastructure projects under the Build Build Build program.