The bill reducing the corporate income tax and streamlining fiscal incentives will likely be approved on second reading in the House of Representatives in two weeks, the head of the chamber’s Ways and Means committee said on Thursday.
“The week after next, we will try to have an approval. We are working with the Committee on Amendments and we have a technical working group,” said committee chairman Rep. Joey S. Salceda of Albay’s 2nd district said in a press briefing, adding that the chamber will be focused on the proposed P4.1-trillion national budget for 2020 which the Executive is expected to submit to Congress by Aug. 21.
Formerly known as “Tax Reform for Attracting Better and High-quality Opportunities” or TRABAHO, House Bill No. 313 or the “Corporate Income Tax and Incentives Reform Act” (CITIRA) authored by Mr. Salceda slashes corporate income tax rates but also streamlines investors’ perks by making them time-bound and performance-based. Among others, the bill seeks to cut the current 30% corporate income tax rate — deemed the highest among major Asian markets — by two percentage points every other year to 20% in 2029.
It was approved at committee level last Wednesday, while HB 1026, which proposed to increase the excise tax rate on alcohol products and e-cigarettes, bagged second-reading approval in the evening of that same day.
In the Senate, the Ways and Means committee will begin parallel hearings to tackle remaining tax reform packages, beginning with the first two measures that have advanced in the House.
Finance Undersecretary Karl Kendrick T. Chua on Thursday said the alcohol and e-cigarette tax bill is expected to bag final reading next week and may be transmitted in the Senate by end of August.
“It will be on third reading next week and it might be transmitted to the Senate the week after, so mga end of August the Senate might receive the bill already,” Mr. Chua said during the first Ways and Means committee hearing in the Senate.
The House committee applied Section 48 of House Rule No. 10, which allows immediate approval of bills that secured third-reading approval in the last Congress.
Among others HB 1026 will increase to 22% from 20% the ad valorem tax on the net retail price per proof of distilled spirits, and the specific tax to P30 per liter from P23.40 currently. The specific tax rate will be increased by P5 every year until it reaches P45 in 2022, and will be increased by seven percent annually beginning 2023.
This is lower than the DoF proposal to increase ad valorem tax to 25% and specific tax rate to P40 per liter. Under the DoF proposal, the specific tax rate was to be increased by P5 until it reaches P55 by 2023, and by 10% annually thereafter.
The House version is expected to generate about P33.3 billion in the first year of implementation, while the DoF’s version was estimated to bring in some P52 billion.
“Well, I intend to have weekly hearings, but in between I am encouraging my colleagues, encouraging DoF (Department of Finance) to meet with the other senators because we have different hearings going on at the same time,” Senator Pia S. Cayetano, committee chairman, told reporters in a briefing after the hearing. — Charmaine A. Tadalan and Vince Angelo C. Ferreras
