Next year, the government will not tax 13th month pay and other bonuses of up to P90,000 under a compromise reached by the Senate and House panels reconciling their versions of the proposed Tax Reform for Acceleration and Inclusion (TRAIN) Act.
The panels also agreed to exempt P250,000 in annual income of all individual taxpayers, he said.
But the two panels have yet to reach a compromise on the Senate’s controversial proposal to raise coal tax by 3,000 percent.
Under the Senate version of the proposed tax reform measure, the increase in the coal tax will be collected in three tranches until 2020 on top of the current P10 excise tax.
The tax will be raised to P100 in 2018, P200 in 2019 and P300 by 2020.
“We will not allow that. Definitely not,” Speaker Pantaleon Alvarez said in a radio interview on Thursday.
Ripple effect on prices
No such tax is included in the House version of the TRAIN bill.
“Let us look at this objectively from the point of view of the consumers. If, for example, you raise additional taxes on coal power plants, industry players may not even complain because they will just pass it on to consumers,” Alvarez said.
This would further create a ripple effect of price increase in goods and services, he said.
“We’re looking out for the welfare of the consumers. We already have the highest power rates in Asia,” he said.
The panels agreed to increase from P82,000 to P90,000 the tax exemption cap on the 13th month pay and other bonuses that include productivity bonuses and Christmas bonuses, Sen. Sonny Angara said.
Angara, who as chair of the Senate ways and means committee heads the Senate panel in the conference committee, told reporters that the Senate had proposed the retention of the P82,000 tax-free cap but the House proposed that it be raised to P100,000.
He said that the two panels met “halfway” by agreeing to the P90,000 tax exemption, which he claimed would cause a small revenue loss for the government.
“Next year, the tax exemption on the 13th month pay and other bonuses would be bigger and the government could not tax this so the take-home pay will be bigger. This is a good Christmas gift,” Angara told reporters.
He also said the bicameral conference committee had agreed on the proposal to tax sugar-sweetened beverages.
He said the new tax rates would be P6 per liter for beverages using sugar and artificial sugar, and P12 per liter for beverages using high fructose corn syrup.
At a press briefing, Angara said the conference committee was already 85-90 percent done with the TRAIN bill after holding three sessions totaling 30 hours.
Last bicam session
He said the last session of the conference committee was on Friday when they would thrash out contentious provisions proposed by the Senate but not by the House.
These include the proposed 10-percent excise tax on cosmetic procedures and body enhancements undertaken for aesthetic reasons, the coal excise tax as well as the excise taxes on all nonmetallic minerals and quarry resources, and all metallic minerals, including copper, gold and chromite from the current 2 percent to 4 percent.
Also still to be tackled is the excise tax on petroleum and the automobile excise tax.
Angara said the panels would still have to decide on the income tax exemption for self-employed and professionals, specifically the 8-percent flat tax on gross sales and receipts in lieu of income tax and percentage tax to be filed once a year.
“Hopefully, we will have a common ground [by Friday],” Angara said.
He said the panels expected the committee report on the TRAIN bill to be ratified by the Senate and House on Monday.