NON-CONSENSUS

Administration congressmen are still not rallying around the proposed comprehensive tax reform package over the thorny issues of the removal of exemptions to the Value Added tax and fuel excise taxes.

adminsitration met in a caucus Wednesday with the House leadership and Executive Secretary Salvador Medialdea and Budget Secretary Benjamin Diokno but left the meeting with the agreement to propose amendments to the proposal , at the latest—Monday.

Ways and Means Committee Chair Dakila Carlo Cua said, “sa parliamenatry procedure po this is not the venue to adopt amendments sa period of amendments po mangyayari yung actual amendments pero ang naging take away po ng ating mga miyembro was to submit by monday their proposed amendments if any for the house leadership to consider their proposals”

Cua explained what was the persistent concern of his colleagues. “doon sa aming survey which was reflected during the cuasus the top cocnerns were the issues on the fuel excise tax was well as the issues on the exemptions of the VAT yun ang by far the 2 most conetntious maraming concern ang aming mga kasama”

House Majority Leader Rodolfo Farinas said, “mga concerns nila kanina cooperatives fishing industry sugar the beverages napagusapan  si  (dof) usec karl (chua)  took note we will adjust accordingly if necessary.”

Farinas explained that they already have a working time table that could see the bill at the senate by the end of the current session on May 31. under the timetable of the leadership, the House will open sponsorhsip on the tax package in plenary on Monday to facilitate a vote on 2nd reading by Wednesday. “upon the direction of the speaker napagaggreehan namin doonwe gave them till noontime  of monday to submit the amendments and kungdi naman ganun karami we can just introduce the amendments on the  floor pero kung amsyado marami we will come up with a subsitutte  bill para ipresent na namin for second reading monday tuesday  botohan na namin ng wednesday , next week 3 session days the speaker wants it to be approved on 3rd reading  bago kami mag adjourn ng May 31 para sa second regular session it will be alreday in the hands of the senate kasi nga all appropriation revenue trafiff bills  emanate exclusively from us they cannot do anything till we come up with this para tamang tama  gsuto ni speaker pag maapprove na namin ito bigay na namin sa kanila pagbalik ng July yun ginagawa nila sa amin budget process naman kami”

Cua however stood by the bill his committee worked on. “sa aking personal not speaking for the majority or anybody else sa aking personal sa tingin ko the result of the comittee report is the best possible version that could come out  currently pero siyempre maari pang maimprove pa yan  that is why it is welcome na magsubmit pa ang mga kasamahan ng kanilang proposed amedments in any field and any subject sa aking personal na pananaw open to duscussions on those matters syempre as we solicit the proposals of our colleagues we will do the calculations on the impact on revenues imapct on defeicit pero again sa akin wala namang cast in stone at this moment.”

Cua remains confident that the bill will still pass. “we are confident that with the leadership of our speaker and the majority leader with their spearheading the  supermajority almost 100% sure na maipapasa ng ating kamara.”

Ways and Means Committee Senior Vice-Chair Joey Salceda admits the proposal keeps the P6 excise tax on fuel that will be staggered for 3 years, P3 per liter on the first year, P2 per liter on the 2nd and the remaining P1 on the 3rd year. Salceda’s reason,  the effect on the  prices of good wont be that much, plus there are mitigation measures they are putting in place. ” pag tingnan mo po yung  inflationary impact di lalampas ng .9%  if at all inoobserve downward sloping and number 3 address through direct transfer sa masaskaatan”

Salceda explains public utility vehicles for example will enjoy subsidies.” katulad ng namamasada meron silang diskwento pagdatingsa gasolina yung namamasahe meron silang direct transfer between 300-600 pesos per month for 3 years 3-2-1″

Salceda explains that while this hits everyone, the subsidies will in effect, return to the poor the taxes.” kasi po kung isiispin mo oil is commodity of the rich top1% accounts is equal to the consumption of the lowest 50% anumang tama sa 50% isososli top 1% yun mapupunta sa gobyerno para po pantutos sa infrastractura at ipa bang social services yung sa 3-2-1 is with respect to its impact doon po sa mga namamasahe at namamasada na merong paraan para di lang  maibsan in fact sobrahan  kung ano impact ng oil sa kanila 600 pesos per month times ten impact ng oil sa pang araw araw oil is one of the most profressive most egalitarian items of the tax reform measure”

aside from the fuel subsidies, there is also the existing conditional cash transfer program and a proposed unconditional cash transfer program. “may CCT tayo naka 2 listahan  na tayo unang listahan 15.4M  families  listed based on ownership of  their houses kung dingding bukas o plastic o tira tira mdade of light materials , naka 2 na kilala na natin mahirap at  kung ano pang araw araw pagtransfer walang kundisyon  yung kundisyon dati  dapat may anak na nag aaral between grade 1 to HS kahit wala kang grade 1 to hs bibigyan ka po dahil sa epekto ng buwis sa pamilya ganda po ng pagkasulat ni chair cua ng tinatawag ng eamarking ng oil revenues for direct income transfer one of the best ive seen in terms of legislation in the whole world”

Cua says part of this mitigation measure is the establishment of a social benefits card that will have different benefits for all depending life circumstances, that is, those who need it get more benefits.

“if youll see the earmarking  may nakalagay po diyan establishing a social benefits card ito pong card ito pong isang pamamaraan na gusto nating ibigay sa pangulong duterte na siya ay maempower to give assistance and protection to the most vulenarble of our society dahil targeted maimagine natin tatay nanay lolo lla may seniro citizens card na kahit saan sila magpunta ay magagamit ito atin ring introduce ang social benefits card na magkakaroon ng benefits diskwentt halimbawa sa PUV transportation dsikwento sa pagbili ng gamot pero di po para sa lahat yan po ay magkakaroon ng diwskento according to what the govt needs  according to what the president sees na tatamaan ng vulnerable ng ating mga buwis  yung aming makukuha mula sa mahihirap ibabalik natin isosoli para di sila nahihirapan sa mga bilihin.”

unlike the existing senior citizens card issued by local government units, this social benefits card will be issued by the national government.”the card is a system that will hopefully make it easier for govt to streamline all servcies merong cct may panukalang UCT may benefits PWDs senior citizens na di nareregulate ng NG  dahil di nadadaan sa ng ang card kungdi gfalingsa  LGU ang sr citizen this will be a card that has all the beneifts so kung ikaw ay isang sr senior citizen na mahirpa doble ang benepisyo ng laman ng card pero kung ikaw mayaman working age productive age malamang card mo diu gaanong mayaman sa card”

Cua adds, “it will not be uniform it will depend on the conditions circumstances of the individual and family kunyary ikaw cct beneficiary , sr citizen doble sayo pag di sr citizen yun lang cash assistance ang laman ng card di magkakacash card ireredeem pa rin it enetiles you to ebnefits according to what the OP and govt sees fit”

The card program however will last only 3 years. 40% of revenues from the fuel excise tax will go to the subsidies. “3 years  for the establishment of 3 years not more than 40% of the revenues of the fuel then again if there are other sources from which govt can get allocate for that servcie privilege or benefit pwede anggaling sa ibang sources this does not limit the govt pwede nila expand ito kung successful ang programa ng social benefits card pwede nila palakihin

344.8B is the projected gross revenues from the entire package, of which 140B will offset the foregone revenues due to the lowering of personal income taxes. Salceda explains the net revenues on the first year will be over 200B and 280B at full implementation. “204.8B (projected revenues) 280 full implementation, actually wpede na to magnovember kung sa wednesday pasado kasi naexplain na maigi sa senate there were alreday a lot of engagement were very hopeful this is a very egalitarian measure if youd like to be a senator youd like to sponsor this measure”

The lawmakers believe that the package will earn the country a credit ratings upgrade that will make government financing cheaper and give govt more fiscal space for projects.

Cua believes that once the mitigation measures expire in 3 years, filipinos will be better positioned to deal with the new reality. “if this passes the way it is written our credit rating will be upgraded,kung mura ang financing ng gobyerno mas lalong magmumura so ibig sabihin  mas maraming space sa budget para bigay sa serbisyo projects…lahat yan dadami rin dahil maiibsan yung bigat ng fixed income earners they will ahve more money to invest in their chidlren..that being said ako naniniwala under this administration PRRD will spend wisely fight coruption and make sure this money goes to the poor. this will be the crown jewel of the eocnomic reform agenda of the duterte administration”

Cua also explained that the removal of deductions from individual fixed income earners will be offset by the lower income tax rates that will result in a windfall for the taxpayers. “sa current system before this law will be apsssed isang couple may get the decuctions  depending on the number of their dependents pero pag sinuma lahat ng deductions as against the 250 blanket that will be available to each person kung kayo mag asawa sa pamilya niyo 500 thousand  ang nontaxable imcome  so mas dramatically malaking imapct ito na magbebefit ang pamilya

kung titignan mo yung maliit na nawala compared sa malaking lump sum na binigay ng gobyerno malaking advantage pa rin ito sa mga fixed income earners”

House speaker Pantaleon ALvarez for his part now backs the bill despite initial hesitation, saying government already committed to the full implementation of the attrition law that will incentivize and penalize the failure to meet collection targets. “yung intial concerns ko naddres naman meron nang solution para maddress yung prublema with respect to the collections ng customs at bir meron na kaming udnerstanding witht he dof we will fully implement yung attrition law at di sila wpedeng magbago ng target once naestablish targets for the year di na pwedneg mag adjust. yan na magiging basis sa pag apply ng attrition law.”

Among the key features of the substitute bill are the following: 1) the lowering of personal income tax (PIT) rates as proposed by the DOF but indexed to cumulative Consumer Price Index (CPI) inflation every three years; 2) a flat rate of 6 percent for the estate and donor’s taxes 3) broadening the tax base by removing special laws on VAT exemptions, including those for cooperatives, housing and leasing, but retaining exemptions for seniors and persons with disabilities;
4) staggered “3-2-1” excise tax increase for petroleum products from 2018 to 2020 but with no indexation to inflation, and liquefied petroleum gas (LPG) used as feedstock to be exempted from the hike;  5)  a five-bracket excise tax structure for automobiles with a two-year phase-in period for the tax increases; and 6) earmarking of 40 percent of the proceeds from the fuel excise tax increase for social protection programs for the first three years of the tax reform measure’s implementation.
for the Value Added Tax (VAT), the threshold for exemptions was increased to P5 million and indexed to inflation every three years.
The zero-VAT rate was also retained for the renewable energy sector and limited to direct exporters, pending the establishment of the DOF-proposed cash refund system, in which refunds can be obtained by the beneficiary-taxpayers within 90 days of their application for such exemptions,
For the self-employed and professionals within the VAT threshold of P5million, Chua said the substitute bill require them to pay an 8 percent tax on gross sales or receipts in lieu of the income and percentage taxes.
The tax for those above this VAT threshold will be based on the 30 percent corporate income tax rate with minimum tax,
 the Optional Standard Deductions (OSD) was retained at 40 percent of gross sales/receipts under the substitute bill.
This substitute bill adopted the DOF proposal to subject lottery and sweepstakes winnings from the Philippine Charity Sweepstakes Office (PCSO) to a 20 percent passive income tax in lieu of the lower 5 percent prize fund tax.
 Another DOF proposal adopted under the substitute bill was the removal of the 15 percent tax rate for the employees of the Regional Operating Headquarters (ROH) of corporations, which are foreign business entities whose purpose is to service its affiliates, subsidiaries or branches in the Philippines and other foreign markets.
 As proposed by the DOF,  the fringe benefit tax  will be initially lowered from 32 percent to 30 percent for the first three years and thereafter incorporated in the gross income of taxpayers.
On oil excises, the original proposal of staggering the P6 increase to P3 in the first year, P2 in the second year and P1 in the third year was adopted, but with no indexation to inflation thereafter.
For automobile excises,  five brackets were adopted (based on price levels) under the substitute bill, which also set a two-year phase-in period for its implementation, he said.
Pickups are exempted under the substitute bill, along with hybrid cars if these vehicles can run 30 kilometers on a single charge.