Comparing the HOR and Senate versions of the Tax Reform for Acceleration and Inclusion (TRAIN)

The Department of Finance (DOF) proposed a Comprehensive Tax Reform Program (CTRP) as a program to update the old, regressive tax system in the country.  The CTRP may have three to four packages, according to the DOF.

The first package is the Tax Reform for Inclusion and Acceleration or TRAIN. It contained provisions for lowering the income tax from 32% to 25%, as well as higher excise taxes in automobile and petroleum products, and changes in VAT exemptions among others.

The government reasons that the tax reforms are “progressive” and would correct the regressive tax system that taxes the poor more. The DOF said the provisions are also “pro-poor”, with the main feature being the lowering of tax income. However, there are more measures that would squeeze more money out of ordinary Filipinos’ pockets than would be returned to them, as even the DOF readies “pantawid programs” for the poor, for the public utility drivers, etc.

The provisions that would raise prices of basic commodities, public utility fares, electricity and other products and services mostly consumed by the poor are the new taxes on sugar-sweetened beverages, removing Value-Added Tax (VAT) exemptions most notably the rent or lease P10,000 below, and raising excise taxes on petroleum products.

DOF Undersecretary Karl Kendrick Chua, former World Bank senior country economist, is the agency’s main lobby person for the CTRP.

The DOF version of the CTRP was endorsed by Quirino Representative Dakila Cua, the chairman of the House ways and means committee. A substitute bill, consolidated from all other similar legislations, breezed past the period of committee and individual amendments, and got a swift approval on second reading.

The House of Representatives approved their version of the TRAIN on third and final reading, with a vote of 246 affirmative, 9 negative and 1 abstain, on May 31. The DOF targeted to have the measure implemented this year.

The Senate approved its version on third and final reading on November 28, with a vote of 17-1. Senate Bill No. 1592, a consolidation of 31 other bills, was prepared by the Senate Committee on Ways and Means, led by Senator Angara.

The Senate version included provisions that the House version did not contain: higher final tax on foreign currency deposits from 7.5 percent to 15 percent, 10-percent excise tax on cosmetic procedures and body enhancements, higher coal excise tax from P10 per metric ton to P100 per metric ton and 100 percent higher excise tax rates of select minerals to 4 percent (from 2%).

The TRAIN is now at the bicameral level where both Houses of Congress would deliberate a final version that would be endorsed for the signature of the president. The two versions agree at least on one of the most touted provisions, the income tax reform.

The HOR and the Senate has the target of completing deliberations on the TRAIN this week, as they have also geared to finalize the measure for the 2018 national budget.

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