Fuel excise tax, VAT removal stall tax reform measure

Leaders of the House of Representatives on Wednesday called for a caucus to ensure the smooth passage of the Duterte administration’s proposed tax reform measure, with the hope that it would be approved before Congress goes on recess on May 31.

As expected, the new excise tax on fuel, as well as the removal of value-added tax (VAT) exemptions for certain sectors, remained the “contentious issues” that the House has to resolve in the bill dubbed Tax Reform for Acceleration and Inclusion (TRAIN).

“In our survey reflected in the caucus, the top concerns are the issues on the fuel excise tax and VAT exemption, which include cooperatives. These, by far, are the two most contentious [issues] over which our colleagues expressed concern,” Quirino Rep. Dakila Cua, chair of the House ways and means committee, said in a press conference.

Another issue discussed was the imposition of tax on sugar for beverages, said Majority Leader Rodolfo Fariñas.

Also at the caucus were Executive Secretary Salvador Medialdea, Budget Secretary Benjamin Diokno and officials from the Department of Finance (DOF), who made a presentation of the administration’s tax reform program.

Social benefit card

Cua said the proposed TRAIN included the establishment of a social benefit card for all Filipinos here and abroad “to give assistance and protection to the most vulnerable of our society.”

This is the bill’s answer to criticism that while the Duterte tax reform measure offers the lowering of personal income taxes, it seeks to impose new taxes that would directly impact the poorest of the poor.

Cua said revenue from the new excise tax on fuel would generate P75 billion in the first year of implementation, P120 billion in the second year and P150 billion in the third year.

Forty percent from each revenue tranche would fund the social benefit card that would be available to the people for three years.

Government projects a net of P204.8 billion in revenue from the tax reform measure. The lower personal income tax would result in   P140 billion forgone revenue.

Fariñas called the Wednesday caucus, directing all committee hearings in conflict with the schedule to be suspended or reset.

All members of the House have until noon of May 22 to submit their proposed amendments to the tax measure, according to Fariñas.

“If there are not too many, then we can just introduce the amendments on the floor. But if there would be too many, then we will come up with the substitute bill to present the bill for second reading on Monday or Tuesday. We will vote on it on Wednesday,” Fariñas said.

According to Fariñas, Speaker Pantaleon Alvarez III wants the bill to be approved on third and final reading before Congress adjourns on May 31 to have it with the Senate by the time they begin their second regular session in July.