Additional excise taxes

The following additional excise taxes were added to TRAIN package one:

Coal excise tax

Coal, while remaining a cheap fuel for power generation, is also a major source of air pollution. The tax on coal and additional oil excise will help promote the shift towards renewable energy sources, while generating revenue for much-needed infrastructure and social services.

Beginning January 1, 2018, a tax of Php 50.00 per metric ton will be imposed on both domestic and imported coal. The tax will be increased by Php 50.00 per metric ton every year until January 1, 2020, when the rate reaches Php 150.00 per metric ton.

Cosmetics excise tax

Under TRAIN, a 5% tax will be imposed on gross receipts of non-essential cosmetic surgery intended for aesthetic purposes only. As cosmetic surgeries for purely aesthetic purposes are non-essential and tend to be expensive, patients also tend to be from higher-income groups. This makes the measure more progressive.

To protect the poor and the vulnerable, procedures covered by the National Health Insurance Program will not be taxed. Cosmetic procedures needed to correct deformities from accidents, disease, or congenital and developmental defects will also be exempt from this tax.

Tobacco excise tax

The increase in excise tax for cigarettes will help discourage the habit of smoking, while generating incremental revenues for health programs and services. Smoking remains a serious health concern and directly increases a wide range of health risks, such as various cardiovascular and respiratory diseases. While smoking incidence has declined in the country, to 15.9 million in 2015 from 17 million in 2009 according to the Global Adults’ Tobaccos Survey, failure to increase taxes on cigarettes may result to an increase in the number of smokers in the coming years.

Beginning January 1, 2018, the excise tax on cigarettes will be increased from Php 30.00 to Php 32.50; to Php 35.00 beginning July 1, 2018; to Php 37.50 beginning January 1, 2020; and to Php 40.00 beginning January 1, 2022. After January 1, 2024, the rates will be increased annually by 4%.

Financial taxes

The Congress has also adjusted the following financial taxes:

Documentary stamp tax

A 100% increase, except on loans with only 50% increase. DST rates for property, savings, and non-life insurance transactions were not changed.

Foreign currency deposit unit (FCDU)

Increased from 7.5% to 15% final tax on interest income.

Capital gains of non-traded stock

Increased from 5 to 10% to 15% final tax on net gains.

Stock transaction tax

Increase from 0.5% to 0.6% of the transaction value