President Rodrigo Duterte poses for a photo with Senate President Aquilino Pimentel III (second from left seated), House Speaker Pantaleon Alvarez (rightmost seated), and other lawmakers following the Ceremonial Signing of the 2018 General Appropriations Act and Tax Reform Acceleration and Inclusion (TRAIN) in Malacañan Palace on Dec. 19, 2017.
PPD/Karl Norman Alonzo
Duterte signs 2018 national budget, tax reform bill
Ian Nicolas Cigaral (philstar.com) - December 19, 2017 - 3:25pm

MANILA, Philippines — President Rodrigo Duterte on Tuesday, December 19, signed into law the P3.8-trillion 2018 national budget, and the first package of the much-awaited tax reform program that seeks to raise P130 billion in revenues to bankroll his administration’s economic agenda.

At a ceremony in Malacañan, Duterte inked the Tax Reform for Acceleration and Inclusion bill, which overhauls the country’s 20-year-old tax regime in a bid to make the tax system fairer and simpler.

Under its P8.44-trillion 2017-2022 “Build, Build, Build” program, the government aims to ramp up its spending on infrastructure alone to P1.899 trillion, equivalent to 7.45% of gross domestic product, by the time Duterte ends his term in 2022.

However, the estimated tax take from the TRAIN is less than the Department of Finance had hoped to raise.

The law will adjust personal income tax rates to shift the burden off lower-income segments toward the “ultra-rich.” Meanwhile, projected revenues to be foregone from lower personal income tax will be offset by higher excise levies on petroleum and automobiles, among others.

The fresh law exempts those earning an annual taxable income of P250,000 and below from paying the personal income tax and raised the tax exemption for 13th month pay and other bonuses to P90,000. 

For petroleum, the law slapped a P1 per kilogram tax for liquefied petroleum gas that will be hiked to P2 in 2019 and raised to P3 in 2020 and onwards.

EXPLAINER: How Duterte's new tax law can affect you

Diesel will have a P2.50 per liter tax on the first year of implementation in 2018, P4.50 in 2019 and P6 in 2020.

All variants of gasoline fuel will be taxed P7 per liter next year, P9 in 2019 and P10 in 2020.

The law also has a safeguard provision that would suspend the tax if Dubai crude oil exceeds $80 per barrel and authorized the DOF to require fuel marking to combat oil smuggling.

Package one of the TRAIN imposed a tax of P6 per liter for beverages using caloric and non-caloric sweeteners and P12 per liter for beverages using high fructose corn syrup.

Tax-exempt are all milk, 3-in-1 coffee, 100 percent natural fruit and vegetable juices, meal replacement and medically indicated beverages. Beverages that used coco sugar and stevia are also excluded from taxation. 

TRAIN also raised excise taxes on both local and imported coal, despite attempts by some lawmakers to exempt coal producers from duties amid concerns that the law could trigger a spike in power costs.

2018 budget

In the same ceremony at the presidential palace, Duterte inked the General Appropriations Act of 2018, about 12.4 percent more than the P3.35-trillion budget for 2017.

As required by the 1987 Constitution, the education department received the lion’s share of the budget with P553.3 billion.

Agencies with the highest allocations include Department of the Interior and Local Government (P170.8 billion), Department of National Defense (P149.7 billion) and Department of Social Welfare and Development (P141.8 billion).

The outlay also provided funds for the free tuition program for state-run universities and colleges.

 

LAW LEGISLATION NATIONAL BUDGET TAX REFORM TRAIN LAW
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