Republic Act No. 10963, or The Tax Reform for Acceleration and Inclusion Act, was signed into law on Dec. 19, 2017. This is the first package of the government’s Comprehensive Tax Reform Program.
The tax reform corrects the long-standing inequity in our tax system by providing income tax cuts for 99 percent of Filipino taxpayers, while raising additional funds for the administration’s Build, Build, Build infrastructure program.
Some of the highlights of TRAIN include exemption of minimum wage earners from personal income taxes, reduction in the number of tax brackets, a broadening of the value-added tax base, and an increase in excise taxes particularly on cigarettes, petroleum products, automobiles, and sweetened beverages.
While most of the Filipino taxpayers are enjoying higher take-home pay, many are also complaining of higher prices of basic commodities. In the first quarter of the implementation of TRAIN, we have experienced several price hikes, most especially in petroleum. This is something we warned the Executive about during the deliberations of the TRAIN law, but according to them, higher prices is just minimal and temporary.
According to the Finance Secretary Sonny Dominguez, Package 1A of the TRAIN will only generate a projected revenue of P89.9 billion, which is only two-thirds of the original revenue target of P134 billion. This may result to a fiscal deficit of 3.3 percent of the gross domestic product for 2018. This is one of the reasons why I have been insisting on a “revenue-neutral” situation, wherein tax revenues must neither increase nor decrease regardless of the changes in the taxation measures. With the TRAIN law, we are now being pressured to catch up with our original revenue target. To address this concern, the Finance Secretary is encouraging the Congress to pass Package 1B sooner to raise additional revenues worth P38.9 billion, resulting to a total of P128.8 billion for the combined packages. Package 1B shall include estate tax amnesty program, adjustments in the Motor Vehicle Users Charge, and some amendments to the bank secrecy law. As a legislator, I believe these matters cannot be made in haste. These decisions should undergo thorough deliberations to make sure that no Filipino is left behind.
I believe that we have legislated good laws with regard to taxation, but maybe the problem is not the existing laws, but the implementation of the laws and the efficiency of tax collection agencies. We remind DOF Secretary Dominguez of the indexation so that the Lateral Attrition Law (RA 9335) can be implemented. It is about time that we fully implement the law, most especially because we are trying to catch up from the losses brought about by the tax cuts of the first package of the TRAIN law.
We look forward to a more effective implementation of the TRAIN law and the Lateral Attrition Law. I stress the importance of the Lateral Attrition Law. More taxes will come to naught if they are not collected properly, efficiently and transparently.