Finance Secretary Carlos Dominguez III has thanked the Congress for ratifying the Tax Reform for Acceleration and Inclusion Act (TRAIN) before the legislature takes its traditional yearend break this week, keeping the Department of Finance (DOF) on schedule for the signing of the bill into law by the President this month and theimplementation of this tax reform package by January next year.
Once signed into law by President Duterte, the TRAIN, which will provide hefty personal income tax cuts for the average taxpayer, will be a “great Christmas and New Year’s gift” that the government would give to the Filipino people,” Dominguez said.
“The bicameral conference committee meetings,which lasted for 30 hours, have come up with a final bill. We are now ready for the TRAIN to leave the station,” Dominguez said.
He said the significant reductions in personal income taxes that taxpayers would get to enjoy once the TRAIN is enacted into law will provide them with more disposable income, while the additional revenue will not only help finance the Duterte administration’s programs on infrastructure modernization and human capital formation, but would also let the government fund direct cash transfers for the bottom 50 percent of the population, which “is the biggest social protection program in terms of number of beneficiaries that the government will undertake to provide financial aid to the country’s poorest households.
“This is the best gift that the government can give to our people,” Dominguez said.
Dominguez said the approval by the Congress of the TRAIN Package 1 will put the Duterte administration “on track to meet its revenue targets as the final approved version adopted is equivalent to about two-thirds of programmed incremental revenue under the TRAIN.
“The Congress will continue to tackle the remaining one-third in early 2018 to complete the first package under the Duterte administration’s Comprehensive Tax Reform Program (CTRP), enabling the government to meet its target of raising enough funds for infrastructure, health, education, social protection and other programs to harness our human capital,” Dominguez said.
The ratified TRAIN bill exempts those earning an annual taxable income of P250, 000 and below from paying the personal income tax (PIT) and raised the tax exemption for 13th month pay and other bonuses to P90,000. Further PIT reductions will be implemented starting 2023.
According to Finance Undersecretary Karl Kendrick Chua, who was among the resource persons in the bicameral conference committee meetings on the TRAIN, 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.
Besides the revenue enhancing measures of adjusting the excise taxes on fuel and automobiles and broadening the value-added tax base, the final ratified version also includes tax administration reforms such as a mandatory fuel marking and monitoring program and, a system that would enable the Bureau of Internal Revenue to check real time the financial submission of large taxpayers, “which will further improve the performance of our revenue generation agencies.”
The DOF submitted to the House of Representatives its original TRAIN proposal in September last year, which was later modified and introduced in the chamber by Quirino Rep. Dakila Carlo Cua as HB 4774 and later consolidated with other tax reform-related measures as HB 5636.
This House version was finally approved by the House before the adjournment of the first regular session of the 17th Congress last May.
The Senate ways and means committee began the deliberations on the TRAIN, which was filed in the chamber by Senate President Aquilino Pimentel III as Senate Bill (SB) No. 1408, last March 22.
The Senate began conducting plenary debates on the revised measure, SB 1592, on Sept. 23 and finally approved it with substantial amendments last Nov. 28.
“The tax reform bill seeks to achieve a simpler, fairer, and more efficient tax system characterized by lower rates and a broader base, to encourage investment, job creation, and poverty reduction,” Dominguez said.