A leader of the House of Representatives has filed separate measures covering three of the remaining tranches of President Rodrigo Duterte’s comprehensive tax reform program along with a new “sin” tax reform bill that aims to further increase excise taxes on alcoholic drinks and smoking alternatives such as heated tobacco and vapor (vaping) products.
Deputy Speaker Luis Raymund Villafuerte of Camarines Sur filed House Bill 1909 that proposes to reduce the corporate income tax rate from 30 to 20 percent by 2029 and rationalize fiscal incentives; HB 1908, which puts in place a just, equitable and impartial real property valuation system for local government units based on international standards; and HB 1907 that encourages the development of the capital market by making the tax system in the financial sector fairer, simpler, more efficient and revenue-neutral.
President Duterte called on the 18th Congress in his fourth State of the Nation Address last week to act on these tax reform bills to enhance growth and raise funds for his priority programs over the final half of his six-year term.
Villafuerte, who is deputy speaker for finance, said these three CTRP packages will broaden the revenue base, simplify and update the country’s complicated tax system, and ensure the country’s long-term fiscal stability, which, in turn, will help the government hit its target of securing an “A” investment-grade credit rating before 2022.
The Philippines, for the first time ever, recently secured from Standard & Poor’s (SP) Global Ratings a credit rating of “BBB+,” which is just a grade lower than an “A” rating that is generally given to the world’s stable economies.
HB 1909, which represents Package 2 of the President’s CTRP, will “widen the corporate tax base and plug its leakages” and “help alleviate the burden on the business community, especially the micro, small and medium-sized enterprises (MSMEs),” Villafuerte said.
Reforming tax incentives system, which Villafuerte said should be “rationalized and disciplined” is expected to attract investments that will deliver tangible benefits to the people.
In seeking to institute reforms in the real property valuation system, Villafuerte said these will correct inefficiencies that have hindered the growth of the country’s land sector.
The bill, which constitutes Package 3 of the CTRP, seeks to implement the reforms in the system through the Bureau of Local Government Finance (BLGF), which shall be the lead agency tasked to review and approve the Schedule of Market Values (SMVs) of all LGUs, said Villafuerte, who had served as CamSur governor for three terms.
“With more than 23 national government agencies and 1,700 LGUs using different systems and methodologies, inefficiencies are sure to arise from the lack of a unified national standard,” said Villafuerte.
He said placing the task of reviewing the SMVs of local governments on the BLGF, which is under the Department of Finance (DOF), will “separate the technical function of real property valuation from the political function of taxation practiced by local elective officials.”
HB 1907, meanwhile, aims to simplify the 80 tax rates and tax bases in the financial sector to reduce costs, encourage transparent returns on investment, and develop the capital market “by adjusting, if not removing altogether, taxes that deter legitimate movement towards the initial public listing of companies,” Villafuerte said.
Villafuerte said an updated “sin” tax reform law, as outlined in HB 1906, is necessary to discourage smoking and excessive alcohol drinking, especially among the youth, while raising revenues to completely fill the funding huge requirement for the Universal Health Care (UHC) program.
“Imposing higher excise taxes is still the most effective policy tool to affect prices to discourage consumption of ‘sin’ products, in particular, among the youth and the poor who are the most sensitive to price changes,” Villafuerte said.
While the previous Congress raised taxes on cigarettes and introduced a new tax on heated tobacco products (HTPs) and vapor products, Villafuerte said the estimated revenues generated from this law will only amount to P15.7 billion in 2020, and a total of P129.9 billion from 2020 to 2024, which is not enough to close funding gap of UHC program.
The funding shortfall of the UHC program in 2020, the first year of its implementation, is an estimated P62 billion.
Villafuerte said the additional revenues from his new “sin” tax reform proposal will “help sustain PhilHealth coverage for all Filipino families; improve accessibility and affordability to quality healthcare, and provide better outpatient benefit package, including check-up or consultation and medicines.”
HTPs fall within the definition of cigarettes under Republic Act 9211, and thus should be taxed the same rates as cigarettes, Villafuerte said.
The health impact and safety of vapor products has not yet been conclusively determined, Villafuerte said. “However, because of the established addictive effect of nicotine, we propose to increase the excise tax rates of vapor products to discourage consumption. To prevent children and youth from consuming vapor products, variants with flavoring other than plain tobacco or plain menthol, are proposed to be prohibited,” he added.
Earlier, Villafuerte said the House of Representatives will initiate regular meetings not only with Cabinet officials but with senators as well to speed up the approval of the Duterte administration’s CTRP packages and other priority legislative measures.
Villafuerte said these planned regular dialogues will be held even ahead of the meeting of the Legislative-Executive Development Advisory Council (LEDAC), which might be convened next month to discuss President Duterte’s priority legislative agenda that he had outlined in his latest SONA.
Villafuerte said among the measures that the House leadership would work on getting passed this year are the remaining bills under the CTRP, which the President endorsed in his latest SONA.
He added that the House leadership would also work on the timely approval of the 2020 General Appropriations Bill (GAB)--to avoid the four-month delay in the passage of the 2019 national budget that forced Malacañang to hold off on the implementation of its priority projects and eventually led to the lower-than-expected growth of 5.6% in the year’s first quarter.
http://www.manilastandard.net/news/national/301905/solon-files-tax-reform-bills-outlined-in-sona.html
