20% tax eyed on lotto winnings, cosmetic surgery

MANILA, Philippines — Cosmetic surgery as well as lotto winnings will be slapped a 20-percent tax to raise revenues for the government under the Senate version of the proposed Tax Reform for Acceleration and Inclusion (TRAIN).

Sen. Sonny Angara, chairman of the Senate ways and means committee, said the 20 percent excise tax on cosmetic surgery is expected to raise about P2 billion annually, while the same imposition on lotto winnings could generate anywhere from P8 billion to P10 billion.

Under the TRAIN bill submitted to the plenary last week, cosmetic procedures, surgeries and body enhancements undertaken for aesthetic reasons will be taxed.

Reconstructive surgery or the repair, reconstruction and restoration of facial and bodily functions due to congenital disorders, trauma, burns, infections, disease and those intended to correct dysfunctional areas of the body shall be exempt from the excise tax.

For lotto winnings, Angara said prizes of P100,000 and below will be exempt from tax.

He said lottery winnings are taxed in other countries. He said the 20 percent excise tax “shouldn’t matter to the winners” as they are helping the government while bringing home the money.

The TRAIN bill as drafted by the panel is projected to raise P148 billion in fresh revenues.

In sponsoring the measure, Angara said the measure’s salient feature is that as much as 99 percent of workers will enjoy higher take-home pay without sacrificing the goal of raising revenues to boost growth.

“Finally, after 20 long and arduous years, our workers will have more take-home pay. We want more Filipinos to have higher purchasing power… join the ranks of the economically well-off,” Angara said in his sponsorship speech.

“This TRAIN needs to get moving but we make sure that Filipinos are onboard when it does,” he said.

He also emphasized the bill provides for several earmarking of proceeds to ensure that the revenues benefit the people.

Under the Senate version, the first P150,000 annual taxable income will be exempted, while retaining the P82,000 tax exemption for 13th month pay and other bonuses, and the maximum P100,000 additional exemption for up to four dependents.

Angara said this translates to an approximate tax-exempt monthly income of P25,000 for workers with four dependents, in line with President Duterte’s campaign promise to exempt workers earning P25,000 and below from income tax.

From the current two million tax-exempt minimum wage earners, the proposed new tax scheme will triple the exempt income taxpayers to around six million, he said.

For self-employed and professionals, doctors, lawyers and accountants, the bill introduces a flat eight percent tax on gross sales for easier compliance.

So-called marginal income earners like sari-sari store owners or fishball vendors who have gross sales not exceeding P100,000 are now tax-exempt.