Albay Rep. Joey Sarte Salceda has filed House Bill 4688, titled Tax Reform for Acceleration and Inclusion or TRAIN, a centerpiece program that will "ultimately reduce poverty to single digit, grow the economy by 9%, and transform the Philippines into an Asian economic powerhouse by 2028, with USD 1.2 trillion Gross Domestic Product (GDP). It will then qualify the country for membership in the Organization for Economic Cooperation and Development (OECD).
"This is the TRAIN of the Duterte Express, which I committed to file during the Philippine Development Forum in Davao last November with the participation of non-government agencies, civil society organizations, official development assistance ODA partners, and LGUs," the Albay lawmaker explained.
House Bill 4688 aims "to create a tax system that is simpler, fairer and more efficient, characterized by low rates and a broad base that promotes investment, job creation and poverty reduction."
The bill, Salceda said, ran parallel with President Rodrigo Duterte's "Tunay na Pagbabago" or real positive change commitment to the Filipino people, that included more inclusive growth and comfortable life for all, improved public services, more and better jobs and more money in the people's pockets; and safe, healthy, and peaceful communities.
The measure is a concrete step in making tax rates on income in the Philippines competitive in the region and fit the structural objective of the Asean Economic Community (AEC). It seeks the "full and immediate adjustment of Personal Income Tax (PIT) on the first year," since according to Salceda, "the PIT income bracket is one of the most horrific and protracted social injustices" confronting Filipinos.
Salceda describes the Philippine PIT as the most regressive in the entire Asia. "And we do this to the most faithful partner of the government and dependable pillar of taxes -- the employees whose share of nation building is automatically withheld, with compliance at almost 99% since they have no choice. The expected net benefit here would be P156 billion," he pointed out.
HB 4688 also provides that 25 percent of the compensating revenues from excise tax on petroleum of Php 165 billion will be earmarked for subsidies to the lowest 50 percent by way of fare vouchers and direct income transfers to be administered by the Department of Social Welfare and Development (DSWD), and to be designed by an inter-agency committee composed of DSWD, Department of Budget and Management, and the Department of Finance.
The direct income transfers, he said, would make the entire tax package more progressive with the lowest 10 percent of the population seeing incomes rise by 12 percent, and it would be effective for three years. The annual inflation adjustments on excise tax on petroleum would not be implemented if the Dubai crude exceeds per barrel in the previous year, he added.
He stressed that the Philippines needs to sustain an annual high growth of at least 7 percent one generation; shifts the source of growth from consumption to investment; and heavily invests in our people through improved social services, such as public health and education systems, and in better infrastructure to improve connectivity and raise productivity.
The country, he added, required an additional one trillion pesos necessary investments annually over the long term, of which some Php 600 billion - equivalent to 3 percent of the GDP - was targeted by 2019.
Salceda said HB 4688 would be complemented by major tax administration reforms in both the Bureau of Internal Revenue and Bureau of Customs, proposed separately under the Tax Administration Reform Act, in addition to continuing budget reforms pursued to promote spending transparency and efficiency.
The tax reform program consisted of several packages, with each package balancing trade-offs - lowering of some tax rates while broadening the base of others, Salceda said.
Source: Philippines News Agency