3-step oil excise tax hike eyed

January 19,2017
AP File photo

AP File photo

As prices of oil products as well as vehicles will increase under the proposed first package of the Duterte’s administration comprehensive tax reform program, inflation is seen to rise 3 percent or within the government’s target next year, according to the Department of Finance.

House Bill (HB) No. 4774 filed by House ways and means committee chair and Quirino Rep. Dakila Cua last Tuesday contained the DOF’s proposal to lower personal income taxes, broaden the VAT base, increase excise taxes on petroleum and automobiles as well as reduce the estate and donors taxes.

Finance Undersecretary Karl Kendrick T. Chua told a House ways and means committee hearing on Wednesday that the inflation rate could hit 3.3 percent when the tax reform package is implemented next year, provided Congress approves the package by the middle of this year.

The increases in oil and vehicle excise taxes would add about 1.5 percentage points to inflation, Chua said, although he pointed out the projected headline inflation in 2018 would still be within the 2-4 percent government target.

Unlike the previous versions of the DOF’s tax policy reform program, HB 4774 will no longer seek to remove the value-added tax (VAT) exemption being enjoyed by senior citizens as well as persons with disabilities, Chua said.

After which the government would implement annual small indexation of rates.

Chua said HB 4774 would also push for a tax on lottery while lowering the estate and donor’s taxes to a flat rate of 6 percent.

Also under the first package, the following tax administration measures were to be pursued: Mandatory use of fuel marking; mandatory issuance of e-receipts; mandatory interconnection of large and medium firms point-of-sale machines and accounting system with the Bureau of Internal Revenue; mandatory use of GPS locks when transporting cargo from ports to economic zones and free ports, and relaxation of bank secrecy for fraud cases.

The bill retained the key provisions of the original first package as proposed by the DOF, including adjusting personal income tax brackets to correct “income bracket creeping”; reducing the maximum personal income tax rate to 25 percent over time, save for the “ultra-rich” who would be slapped a higher 35 percent, and shifting to a simpler modified gross system.

Based on the DOF’s computations, the first package would result in a net revenue gain of P162.5 billion in the first year of implementation as the P139.6 billion in foregone revenues form lower personal income as well as estate and donor taxes would be offset by the P302.1-billion gain coming from VAT base expansion (P92.5 billion), higher automobile excise (P31.4 billion), higher excise taxes on petroleum (P120.9 billion) and P57.4 billion in complementary revenues from other measures emanating from Congress. –Ben O. de Vera 

Disclaimer: The comments uploaded on this site do not necessarily represent or reflect the views of management and owner of Cebudailynews. We reserve the right to exclude comments that we deem to be inconsistent with our editorial standards.