AUTO INDUSTRY NEWS

Senate votes 17-1 in favor of revised tax bill

Senate votes 17-1 in favor of revised tax bill image

Eric Tipan / Manufacturer Press | November 29, 2017 11:17

TRAIN bill approved in third reading

The Senate has approved its version of the Tax Reform for Acceleration and Inclusion (TRAIN) bill, which exempts some 6.8 million working from paying taxes while increasing the excise tax rates on specific products in the market, including cars.

Approved with 17 affirmative votes and only 1 negative, TRAIN bill or Senate Bill 1592, it was authored by the chairman of the ways and means committee Senator Sonny Angaran and co-authored by Senate President Aquilino "Koko" Pimentel III, Senate President Pro-Tempore Ralph Recto, Senate Majority Leader Vicente Sotto III, Senate Minority Leader Franklin Drilon and Senators Cynthia Villar, Loren Legarda, Richard Gordon, Juan Miguel Zubiri, Joseph Victor Ejercito, Nancy Binay, Paolo Benigno Aquino IV, Francis Escudero, Joel Villanueva, and Sherwin Gatchalian.

With massive funds required to fund the government’s ‘Build, Build, Build’ infrastructure program, the TRAIN bill has been made priority legislation by both Houses of Congress and the Duterte administration.

Concerns were raised regarding the threat TRAIN bill brings against the public’s buying power but under the Senate’s version of the bill, 7.5 million individual income taxpayers will enjoy lower income tax rates. This is due to the exemption of the first Php 250,000 annual taxable income and the P82,000 tax exemption for 13th month pay and other bonuses.

"Sa kasaysayan ng pagbubuwis sa bansa, ito na ang pinakamalaking income tax relief na maipagkakaloob natin sa mga manggagawa. We're putting more money in the pockets of Filipinos. Gusto nating gawing patas ang ating income tax system na naging hindi makatarungan sa pagdaan ng panahon," Angara said.

[“In the history of taxation in this country, this is the biggest income tax relief that we have given workers. We’re putting money in the pockets of Filipinos. We want our income tax system to be fair, something it wasn’t in the past.”]

Despite the income tax relief, higher excise taxes from automobiles, petroleum products and various other goods is expected to generate some Php 130 billion in additional revenue.

Under the finalized Senate tax reform package, cars will be levied by a two-tier scheme. A simpler process which will impose a 10% excise tax on cars priced PhP 1,000,000 and below and 20% for cars valued over PhP 1,000,000.

As opposed to the previously proposed two-tier version below.

Senate Tax Reform

Aside from motor vehicles, fuel prices will also increase on a staggered basis. If implemented by 2018, price of gasoline will go up by Php 1.65, diesel by Php 1.75 and LPG by Php 1.

By 2019, gas and diesel prices will go up by Php 2.00 and LPG by Php 1.

In 2020, price of gasoline picks up an increase of Php 2.00, diesel Php 2.25 and Php 1 for LPG.

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As the TRAIN bill makes its way to the bi-cameral committee which begins today, Senate Minority Leader Franklin Drilon expects it to face challenges as there are numerous provisions that differ from the Senate and House of Representatives’ version.

"The bicam could prove to be the real battleground for the passage of the TRAIN,” said Drilon.

Lengthy debates on disagreeing provisions could delay the approval of TRAIN.

The TRAIN bill is expected to be implemented by January 2018.