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The House of Representatives ratified the bill that will lower the personal income tax while taxes on sweetened beverages, petroleum products, cars and tobacco will be higher.
The new tax package is expected to generate ₱134 billion to fund the administration's infrastructure projects, while reducing income tax for the 6.8 million individual income taxpayers has been approved after several meetings of the bicameral conference committee. The Congress finally approved the consolidated version of the Tax Reform for Acceleration and Inclusion (TRAIN) bill.
Those earning ₱250,000 every year or around ₱22,000 on a monthly basis will be exempted from paying taxes, including self-employed individuals. 13th month pay and bonuses amounting to ₱90,000 from taxation are also exempted under the bill.
The new scheme will also lower income tax rates for those earning ₱2 million and below.
President Rodrigo Duterte called the tax reform package as one of the urgent bills to pass in Congress. The President should receive the consolidated version of the bill for veto or approval before it takes effect.
Higher petroleum taxes
The bill also provided for varied tax increases in petroleum products, while keeping to a minimum the increase in liquefied petroleum gas (LPG), diesel, and gasoline.
Finance Department said that the two million richest Filipino families consume 50% of petroleum products in the country.
The bicameral conference committee spread the ₱3 rate increase for LPG over three years—a peso per year increase from 2018 to 2020.
The proposed increase in diesel and bunker fuel—mostly used for public transportation—will be collected in 3 tranches: ₱2.50 next year, ₱4.50 in 2019 and ₱6 in 2020.
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qThe consolidated TRAIN bill also provided for a four-tier tax scheme, to accommodate the around 80 percent of Filipino households who do not own cars.
Electric vehicles will be exempted from tax while hybrid cars will be taxed at 50% rates, to encourage greener and cleaner transportation. Pick-up trucks will also be exempted, as the bill notes they are commonly used by businessmen and entrepreneurs for commercial and agricultural purposes.
The bill will also increase coal excise tax from ₱10 per metric ton to ₱150 per metric ton in a span of three years. The increase will be in increments of ₱50, starting from ₱50 in 2018.
The excise tax rates for all non-metallic minerals and quarry resources, and all metallic minerals were also raised from the current two percent to four percent.
Sugar, tobacco, and cosmetic taxes
The consolidated TRAIN bill imposed a tax of ₱6/liter for beverages using caloric and non-caloric sweeteners, and ₱12/liter for beverages using high fructose corn syrup.
However, all milk and coffee products are exempted from sugar tax, as well as natural fruit and vegetable juices and meal replacements. Medically-indicated beverages will also be exempted from taxes.
Meanwhile, tobacco excise taxes will be raised in phases at ₱2.50 every year—starting at ₱32.50 next year.
Cosmetic surgeries and enhancements for aesthetic reasons will also be subjected to 5% excise tax, which was down from the proposed 20 percent.
The TRAIN bill, however, exempts small businesses with total annual sales of ₱3 million and below from VAT. This, as small and micro businesses represent 98 percent of all registered businesses in the country.
VAT exemptions for raw food or agricultural products, health and education, as well as of senior citizens, Persons with Disability (PWDs), business process outsourcing (BPOs), and cooperatives will be retained.
The sale of prescription drugs and medicines prescribed for diabetes, high cholesterol, and hypertension will be free of VAT starting 2019.
Source: CNN
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