The House of Representatives is set to approve anytime soon the final package of the Comprehensive Tax Reform Program (CTRP), the capstone fiscal reform program of the Duterte administration, which President Ferdinand Marcos Jr. adopted as a policy priority during his maiden State of the Nation Address.
This came after Albay Rep. Joey Sarte Salceda, chair of the House ways and means committee, sponsored the measure embodied in House Bill 4339, alongside Ways and Means senior vice chair and Nueva Ecija Rep. Mikaela Angela Suansing.
“The bill lowers the number of rates on the financial sector from 83 to 58. That will significantly simplify tax administration and encourage more financial transactions and financial inclusion in the country,” Salceda said.
“If we are able to enact this package as proposed, we will be able to complete the Comprehensive Tax Reform, one of the largest tax reform programs of any country in the world. The program, I am proud to say, is now a case study for model reforms and best practices, in Harvard University, where Senior Vice Chair Suansing is a graduate,” Salceda said in his speech.
Apart from simplifying tax rates, the bill harmonizes the interest income tax rates and gradually reduces these from 20 percent to 15 percent.
This, Salceda said, will benefit the small savers or those with savings of less than 15,000 pesos, which comprise 79 percent of the total number of deposit accounts in the country, citing Bangko Sentral ng Pilipinas data on the profile of depositors.
The proposal also removes the documentary stamp tax on certificates. Common employment requirements such as the NBI clearance, birth certificates, diplomas, and transcripts of records will no longer be subject to the DST.
“[F]or ordinary Filipinos, we remove the DST on a host of documents usually required for visas, job applications, and other important day-to-day transactions,” Salceda said.
Documents that will no longer be subject to DST are certificate of profits or interest of property or accumulations; Bank checks, drafts, certificates of deposit not bearing interest and other instruments; Bills of exchange or drafts; Stamp tax on Proxies for voting of any elections; Powers of Attorney; and Certificates, such as diplomas.
“For OFWs, we are also removing the 0.3 percent DST on local remittances. For example, a remittance worth 5,000 pesos will no longer be charged an additional DST of 15 pesos.”
The bill also lowers the tax rate on HMO, pension, and pre-need insurance products from a 12 percent VAT to a two percent premium tax. The adjustment also harmonizes the rate with the rates on life insurance.
As a “clean-up” of the CTRP, the bill also removes excise tax exemption of pick-up trucks introduced under Republic Act 10963, otherwise known as the Tax Reform for Acceleration and Inclusion (TRAIN) law. This is expected to result in at least P12.4 billion in annual incremental revenues per year.
It also includes the repeal of the exemption of foreign currency deposit from interest income tax. Salceda cited that “it is no longer the policy of the State to attract foreign currency deposits as we now have adequate gross international reserves, and are no longer in a dire balance of payment crisis.”
Salceda also sponsored the Single-Use Plastic Bags Excise Tax Act, the VAT on non-resident digital service providers, and the Ease of Paying Taxes Act on the House floor Wednesday.
