President Rodrigo Duterte will only sign into law the proposed comprehensive tax reform program if Congress will pass it in full, Finance Secretary Carlos Dominguez III said.
“If only the tax reducing measures are passed, they can bet their lives, it’s not going to pass. It’s not going to be signed into law. It has to be a package deal,” Dominguez said in an interview at the World Trade Center in Pasay City.
“Someone mentioned, you’re raising so much money abroad anyway through long term ODA [official development assistance]. We raised a total of something like P800 billion to P900 billion. That will [be] spent over six or seven years. Certainly that’s not enough to cover P8-trillion program that we need to spend on. So we have to somehow pay for it, and the way to pay for it is to have a tax reform program,” Dominguez said.
The department submitted its tax reform proposal to Congress on Sept. 26 but was only filed this month by Quirino Rep. Dakila Cua, chairman of the House ways and means committee, under House Bill 4774.
HB 4774 covers the reduction of personal income tax rates and a corresponding set of revenue-compensating measures, including lowering the rates for estate and donor’s taxes, expanding the value-added tax base, but retaining the exemptions enjoyed by senior citizens and persons with disabilities, adjusting automobile and fuel excise taxes.
Several members of the House, however, expressed opposition to the non-popular components of the bill, including the adjustments in taxes slapped on fuel products.
The Finance Department said more than P800 billion revenues would be collected by the government from the adjustments in fuel taxes over the medium term.
The agency said the full implementation of tax policy reform would start in 2018, which would net P162.5 billion, along with another P44.3 billion from legislated tax administration reform. Both reforms will raise a total of P206.8 billion.
Adjusting fuel excise taxes and indexing these to inflation are expected to raise incremental revenues (relative to 2016) of P807.4 billion over the medium term, it said.