12 Sep DOF generates Additional Revenue For Tax Reform Program to Foster Peace In Mindanao
According to the Department of Finance (DOF), there will be an additional revenue to be produced under the proposed tax reform program of Duterte administration to fund projects that will promote peace in Mindanao.
In a statement by Finance Secretary Carlos G. Dominguez III on September 11, Sunday raised taxes on goods and services such as sugar goods, fatty foods, luxury cars, and gambling would help the government to provide financial assistance to poor families in devastated regions such as the Autonomous Region in Muslim Mindanao (ARMM).
In the statement, by 2019 the comprehensive tax reform package set by the DOF is expected to produce P600 billion in revenue, where the P400 billion would be from the new tax reform proposals. The residue would be from the effective efforts to restraint smuggling and corruption in collection agencies such as the Bureau of Customs.
The first tax policy package would decrease the maximum personal income tax rate to 25 percent (from the current 32 percent) which is to be implemented next year, except for the highest income earners, and shift to a simpler modified gross system.
The administration proposed to increase the value-added tax base by lessening exemptions to raw food and other necessities such as education and health; increase the excise tax on petroleum products and index it to inflation; impose a P5 per kilo tax on sugar products (domestic raw sugar, refined sugar as well as imported sugar and sugar substitutes); loosen the bank secrecy in fraud claims, and include tax evasion as a predicate crime of money laundering; this is to make up for the foregone revenues from the lower personal income tax estimated at P139 billion.
The corporate income tax rate would lessen from the current 30 percent to 25 percent but target improved compliance, while justifying the fiscal incentives given to investors when the second tax reform package is implemented in the year 2017.
A third package for 2018 would reduce the rate of estate and donor’s taxes, includes transaction taxes on land (DST, transfer tax, and registration fees) while making the valuation of properties closer to market prices.
The tax on interest income acquired on peso deposits and investment would decrease from 20 percent to 10 percent when the fourth tax policy package is enacted on 2019.
The government intends to coordinate capital income tax rate for dollar deposits and investment, dividends, equity, including the fixed income rates to 10 percent, while also raising the tax on goods traded in the stock market to 1 percent on gross selling price from the current 0.5 percent, these is to compensate for the foregone income.
New revenues generating measures are also planned by the Duterte administration which is “fatty food tax”; luxury tax on cars, jewelry, and yachts; mining taxes; carbon tax; casino and lottery tax; and reconsidering the taxes on tobacco and alcohol products.
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