Government to cushion tax impact

MANILA, Philippines — Cushions will be in place, at least for the poorest of the poor, for the impact of higher consumer prices expected to be triggered by the Tax Reform Acceleration and Inclusion (TRAIN) program, administration lawmakers assured the public yesterday. 

Reps. Bernadette Herrera-Dy of party-list Bagong Henerasyon and Frederick Siao of Iligan City pointed out that the P3.7-trillion budget for 2018 has substantial allocations for the Department of Social Welfare and Development (DSWD) and Department of Tourism (DOT), among others. 

Dy, who chairs the committee on public information of the House of Representatives, said the DSWD has been given the resources to extend help to the indigent, elderly and street children. 

“DSWD has a P1.184-billion Tax Reform Cash Transfer Program allocation aside from the P89.4 billion for the 4Ps program, P19.26 billion for indigent seniors, P3.42 billion for supplemental feeding, and P38.9 million for street children,” she said. 

Dy also said that aside from the regular appropriation for state universities and colleges, CHED has P5.86 billion for “Tulong-Dunong” grants and incentives, plus P3.9 billion for college faculty taking masters and doctoral studies as part of the K to 12 transition program.

The national budget also has a bigger allocation of P106 billion for family health, Dy said, with P4.34 billion for indigents and P15.5 billion for drug procurement.

Siao, for his part, said the 2018 national budget has at least P34 billion allocated for tourism.

“There’s P3 billion for the DOT and P31.97 billion for the Tourism Road Infrastructure Program,” he said.

“For workers in the tourism sector, the DOT has P160 million for tourism industry training. For the tourism entrepreneurs running hotels, resorts, restaurants and other establishments catering to tourists, the agency has P124 million for standards development and enforcement,” Siao revealed.

Siao added the Department of Trade and Industry’s Negosyo Centers budget of P514.579 million and shared service facilities funds of P200 million would also have multiplier effects the tourism sector can gain from.

Also favorable to the tourism sector is the National Greening Program of the Department of Environment and Natural Resources for which P2.787 billion was allocated, plus the various road and local infrastructure funds of the DPWH. 

Protect the poor

Sen. Paolo Benigno Aquino IV said the government should immediately implement social protection programs for the poor as the administration’s new tax reform law is expected to push up prices of consumer goods at the start of the year.

Aquino said millions of poor Filipinos will have to pay for higher prices of goods and services without any financial assistance from the government once the TRAIN, which President Duterte signed into law last month, is implemented.

“While the government is determined to implement the tax reform program starting next year, it will take months before it rolls out the cash transfer program for poor Filipinos,” Aquino said.

Aquino noted the Department of Finance (DOF) proposed a cash transfer program with a P200 monthly financial assistance on the first year and P300 monthly financial assistance for the second and third year to help cover the increase in prices of basic goods.

However, the DOF said it cannot immediately implement the cash transfer program and the TRAIN at the same time, according to Aquino.

The DOF said the TRAIN, which provides for personal income tax exemptions for the first P250,000 of taxable income, provides around 99 percent of Filipino taxpayers with “much-needed relief” after 20 years of no adjustment on the rates.

At the same time, TRAIN is expected to raise “significant revenues” to fund the President’s priority infrastructure and social development programs to reduce poverty from 21.6 percent to a targeted 14 percent by 2022.

Seventy percent of the incremental revenues will help support the government’s infrastructure modernization program, including efforts to strengthen the country’s military and law enforcement capabilities, while 30 percent will go to social services to fund as well the targeted cash transfer program for the poorest 10 million households.

During the period of amendments of the TRAIN law in Congress, Aquino pushed for immediate implementation of the cash transfer program to help poor Filipinos absorb the expected increase in the prices of goods and services.

But during its ratification, Aquino rejected the TRAIN’s approval due to the inability of government to immediately implement the financial assistance program in time for the increase in prices due to provisions on excise tax on fuel and sweetened beverage tax.

Instead of passing the tax burden to the poor, Aquino stressed the government should focus on improving the performance of revenue-collecting agencies such as the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR).

Data from the DOF showed an additional P726 billion could still be collected by government by simply addressing the inefficiencies in tax collection and removing the tax loopholes in the BIR.

The government can also collect at least P231 billion if the importation gap and smuggling are resolved by BOC, Aquino said.

More efficient tax system

Sen. Sonny Angara said the TRAIN is “a simpler, fair, and more efficient” tax system where 99 percent of individual taxpayers will benefit from income tax cuts.

Angara stressed the poor will get subsidies from the government.

“This New Year, poor households will be given unconditional cash transfers and small businesses will enjoy reduced taxes and simplified filing of tax and payment processes under the new tax system,” Angara said.

“We are hopeful that these reforms under TRAIN would bring growth to our families and to our nation. This new measure is just the beginning. There is more work ahead of us in making taxes work for us, especially the poor, who must benefit more from government services,” he said.

Leyte Rep. Henry Ong commended the BIR for issuing a circular regarding the new computation of the withholding tax to be deducted from salaries of fixed-income earners starting today.

This is in compliance with the new individual income tax provisions of the TRAIN Law.

“I commend the BIR for their efficiency and swift action,” Ong, vice chairman of the House committee on banks and financial intermediaries, said.

“I requested the BIR to issue this to the general public so the effects of the TRAIN tax reform will be immediately felt.” – With Paolo Romero