House panel OKs tax reform package: Will fuel tax hike negate lower personal tax?

May 3, 2017 - 7:44 PM
InterAksyon file photo of vehicles at rush hour in Metro Manila.

MANILA, Philippines – The ways and means committee of the House of Representatives approved on Wednesday the proposed tax reform package – one reducing personal income tax, but laying down new impositions such as a higher excise tax on fuel products and on the purchase of new vehicles.

The vote of the panel for the proposed Comprehensive Tax Reform Package was 17-4. There were three abstentions, according to partylist Representatives Antonio Tinio of ACT Teachers and Sarah Elago of Kabataan. Both voted against the measure.

House Bill No. 4774, authored by Quirino Rep. Dakila Cua, the ways and means committee chairperson, will be referred to the plenary for debates. The bill was crafted based on the proposal of the Department of Finance.

“Pinababa ang personal income tax, pero bawi naman sa bagong taxes. Bantayan natin ito [They reduced personal income tax, but will take it back from the new taxes. We should watch this],” Elago said.
Tinio described the bill as “overall anti-poor.”

He warned: “That particular excise tax on fuel will hit the poor the hardest because they are the users of LPG, kerosene nd even gasoline. They are the most vulnerable.”

The bill proposes the lowering of personal income tax from the current 32 percent to 25 percent, to be implemented in several tiers.

As for the excise tax on petroleum products, the bill eyes a staggered increase: with prices of petroleum products rising by P3 on the first year; P2 on the second year; and, P1 on the third year, or a total of P6 pesos per liter in three years.

The excise tax on the purchase of new vehicles will also increase, according to the proposed tax package.
The bill also includes the lifting of tax exemptions of cooperatives, which is being opposed by various groups.

A new provision in the bill included the excise tax on sugar-sweetened beverages and carbonated drinks, which was the subject of a separate bill, but which Tinio said was inserted in the tax package proposal.

The ways and means committee has yet to release a copy of the approved bill.