DOF to submit next package of tax reform by end January

MANILA, Philippines — The Department of Finance (DOF) is planning to submit to Congress a new tax reform package which seeks to adjust taxes on alcohol, tobacco, mining, coal and casinos.

During a speech before the local business community, Finance Secretary Carlos Dominguez announced the DOF’s intent to propose “Package 2 Plus” of its Comprehensive Tax Reform Program (CTRP) before Congress by the end of January.

“By the end of the month we shall also be submitting Package 2 Plus, which includes taxes on tobacco, alcohol, mining, coal and casinos,” Dominguez said during the 69th Management Association of the Philippines Meeting in Taguig City.

According to Dominguez, the package was created to consolidate two pending bills in Congress pushing for even higher tobacco excise taxes than the rates provided under the first package of the CTRP or the Tax Reform for Acceleration and Inclusion (TRAIN).

“There are two bills in the Senate right now, one by Manny Pacquiao and one by JV Ejercito. So we said, if they intend to put it, we will help them with it,” Dominguez said.

Pacquiao wants to raise the excise tax rate of tobacco products to P60 per pack from the current P32.50, while Ejercito is pushing for a P90 per pack rate. However, Dominguez said the final proposed rate is still up for discussion.

Secondly, Dominguez said Package 2 Plus follows the DOF’s plan to review the Sin Tax Law on tobacco and alcohol products.

“That was really planned originally. The sin tax was supposed to be reviewed but actually what they only adjusted is the cigarette tax. So there is still the alcohol tax that has not been reviewed. And according to the original sin tax law that should have been reviewed by the Congress,” Dominguez said.

In terms of mining tax, Dominguez said the bill would help rationalize the excise tax as well as other fees paid by mining firms. He said the bill would also seek to impose value-added tax on casino games.

The proposed tax adjustments on alcohol, tobacco, mining and casinos were originally included in the fifth package of the DOF’s tax reform program.

Package 2 Plus will now supplement Package 2 of the CTRP, which focuses on corporate income taxes and fiscal incentives.

Package 2, which was submitted to the House of Representative last January 15, proposes for the reduction of corporate income tax rates to 25 percent from the current 30 percent, and the rationalization of fiscal incentives being enjoyed by certain business sectors.

Meanwhile, Dominguez said the DOF is also planning to submit to Congress Package 3 and 4 of the CTRP by July 2018.