House of Representatives. INQUIRER FILE PHOTO
Makabayan bloc lawmakers in the House of Representatives slammed as “anti-poor” the Department of Finance (DOF) proposal to remove the value-added tax (VAT) exemptions of the elderly and persons with disabilities (PWDs) and impose additional excise taxes on petroleum products.
In a press briefing at the House of Representatives on Thursday, militant lawmakers representing marginalized sectors said the proposed tax package was “anti-people” and “anti-worker.”
“Glaringly and very blatantly anti-poor, against the interest of the farmers and urban poor sector,” Anakpawis Rep. Arnel Casilao said.
“Tingin namin na ang panukala ng DOF na tax reform ay (We think that the tax reform proposal of the DOF is) anti-teacher, anti-people,” Act Teachers Rep. France Castro added.
Stressing that the proposal would not benefit the poor, Casilao said instead of increasing excise taxes on petroleum products that would consequently raise prices of fuel and products, government should instead go after tax evaders.
He said this is not what President Duterte wants.
Bayan Muna Rep. Carlos Zarate said the benefits of lower personal income tax rate would be offset by the excise tax hike on petroleum products.
In the DOF package, Zarate explained, they reduced the income tax but they imposed an excise tax. The added tax on cigarretes and alcohol products has long been discussed but imposing it on diesel and gasoline would create a domino effect if the diesel is up by P6. It would resulit in a cascade effect to the citizens.
Zarate also found arbitrary the move to make as tax-exempt the workers earning P250,000 and below annually, even while the annual cost of living already reached P300,000.
In opposing the second DOF package lowering corporate income tax, Zarate said: “Kung sino ang mas nakikinabang sa ating ekonomiya at natural resources, siya ang dapat patawan ng mataas na tax (Whoever benefits more from our economy and natural resources should have been imposed a higher tax.)”
“Ang ginawa ng DOF ay may binigay sa kanang kamay ngunit may binawi naman sa kaliwang kamay. Malaki pa ang mawawala sa mga mamamayan kaya’t sa committee level pa lang, lalabanan na natin ito para sa kabutihan ng mamamayan,” he added.
(The DOF has given something to the right hand but has removed something from the left hand. The citizens will endure greater loss so even in the committee level, we will fight it for the welfare of the citizens.)
ACT Teachers Rep. Antonio Tinio said the minimum tax bracket to be tax-exempt should be P396,000, in line with the cost of living of P300,000 a year.
“Masyadong mababa ang minimum na exempted sa tax na P250,000. Ang proposal namin ay ma-exempt ang mga sumasahod ng hindi hihigit sa P396,000 per year. Cost of living ang batayang ginamit natin para rito,” Tinio said.
(The minimum amount of P250,000 exempted from tax is low. Our proposal is to exempt those who earn not more than P396,000 per year. We used the cost of living as a basis.)
Meanwhile, Gabriela Rep. Emmi De Jesus said the imposition of excise taxes would have a chain effect of jacking up prices of basic goods, thereby defeating the purpose of the personal income tax reduction to increase the take-home pay of workers.
In the DOF tax reform package submitted to the House ways and means committee last Tuesday night, the measure seeks to repeal the laws which have been allowing senior citizens and PWDs VAT exemption—Section 4 of the Expanded Senior Citizens Act and Section 32(a) and 33(a) of the Magna Carta for Persons with Disability.
The bill also seeks to remove the tax perks of the elderly and PWDs as an offsetting measure as it seeks to lower the personal income tax rate. The bill also seeks to impose additional excise tax on petroleum products.
READ: DOF tax package to remove VAT exemptions on elderly, PWDs
In repealing Section 4 of the Expanded Senior Citizens Act or Republic Act 9994, the DOF’s proposed package would remove the 20 percent discount and VAT exemption being enjoyed by senior citizens on the following services and products:
- medicine
- professional fees of attending physicians and licensed professional health
- medical and dental services
- diagnostic and laboratory fees
- actual fare on land, public utility, mass transit, domestic air and sea travel
- hotels and similar lodging establishments, restaurants and recreation centers
- theaters, cinema houses and concert halls, circuses, leisure and amusement
- funeral and burial services for the death of senior citizens
Meanwhile, the bill would repeal Section 32(a) of the Magna Carta for Persons with Disability or Republic Act 10754, the latest amendment of which was just passed under the 16th Congress and signed into law by erstwhile President Benigno Aquino III.
The deletion of the provision effectively removes the following VAT exemption and 20 percent discount of PWDs on the following services and products:
- fees and charges relative to the utilization of all services in hotels and similar lodging establishments; restaurants and recreation centers
- admission fees charged by theaters, cinema houses, concert halls, circuses, carnivals and other similar places of culture, leisure and amusement
- purchase of medicines in all drugstores
- medical and dental services including diagnostic and laboratory fees, and professional fees of attending doctor
- actual fare on land, public utility, mass transit, domestic air and sea travel
- funeral and burial services for the death of the PWD
The bill also seeks to repeal Section 33(a) of the law, which allows for tax incentives to relatives of PWDs within the fourth degree of consanguinity whom the PWDs considered as dependents.
The unnumbered bill also seeks to amend the National Internal Revenue Code to impose two tax schedules in 2018 and 2019.
The DOF proposed tax schedule for 2018 is:
- Not over P250,000 – zero percent
- Over P250,000 but not over P400,000 – 20 percent of the excess over P250,000
- Over P400,000 but not over P800,000 – P30,000 + 25 percent of the excess over P400,000
- Over P800,000 but not over P2 million – P130,000 + 30 percent of the excess over P800,000
- Over P2 million but not over P5 million – P490,000 + 32 percent of the excess over P2 million
- Over P5 million – P1.45 million + 35 percent of the excess over P5 million
In the DOF’s proposed tax schedule for 2019, the tax for personal income would further go down:
- Not over P250,000 – zero percent
- Over P250,000 but not over P400,000 – 15 percent of the excess over P250,000
- Over P400,000 but not over P800,000 – P22,500 + 20 percent of the excess over P400,000
- Over P800,000 but not over P2 million – P102,500 + 25 percent of the excess over P800,000
- Over P2 million but not over P5 million – P402,500 + 30 percent of the excess over P2 million
- Over P5 million – P1,302,500 + 35 percent of the excess over P5 million
The new tax brackets would effectively make all income earners below P250,000 tax-exempt, unlike the present tax bracket system:
- Not over P10,000 – 5 percent
- Over P10,000 but not over P30,000 – P500 + 10 percent of the excess over P10,000
- Over P30,000 but not over P70,000 – P2,500 + 15 percent of the excess over P30,000
- Over P70,000 but not over P140,000 – P8,500 + 20 percent of the excess over P70,000
- Over P140,000 but not over P250,000 – P22,500 + 25 percent of the excess over P140,000
- Over P250,000 but not over P500,000 – P50,000 + 30 percent of the excess over P250,000
- Over P500,000 – P125,000 + 32 percent of the excess over P500,000
The new tax bracketing system also increased the tax rate for the highest income earners from 32 percent to 35 percent.
The bill also repealed the tax exemption on 13th month pay and other benefits not exceeding P82,000 in the public and private sector.
READ: Solons warn DOF tax reform package to pass on burden to consumers
Finally, the bill would increase the excise taxes on petroleum products, including imposing new taxes on petroleum products that were previously not imposed with excise tax:
- Lubricating oils and greases – P10 per liter (from P4.5)
- Processed gas – P6 per liter (from P0.05)
- Waxes and Petrolatum – P10 per kilogram (from P3.5)
- Denatured alcohol – P6 per liter (from P0.05)
- Naptha, regular gasoline – P10 per liter (from P4.35)
- Leaded premium gasoline – P10 per liter (from P5.35)
- Unleaded premium gasoline – P10 per liter (from P4.35)
- Aviation turbo jet fuel – P10 per liter (from P3.67)
- Kerosene – P6 per liter (from zero)
- Diesel fuel oil – P6 per liter (from zero)
- Liquefied petroleum gas – P6 per liter (from zero)
- Asphalts – P6 per kilogram (from P0.56)
- Bunker fuel oil – P6 per liter (from zero)
Speaker Pantaleon Alvarez said he would block the offsetting measures that would pass on the tax burden to the consumers. RAM
READ: Alvarez vows to block removal of VAT exemption on DOF tax package