Wednesday, December 20, 2017


President Rodrigo Duterte signs into law the Tax Reform for Acceleration and Inclusion (TRAIN) and the 2018 General Appropriations Act (GAA) on December 19, 2017. Screenshot from RTVM.
There have been stories in the past on how long it takes for some year-end bills that are supposed to take effect at the start of the next January to get signed. Usually bills like the next-year national budget have a bad tendency to get bogged down in congressional committees. None of that is holding water in the administration of President Rodrigo Duterte. On Tuesday of the third week of December, he put his signature on two bills, one being the national budget for 2018 and the other a comprehensive tax reform package with, among others, a lowered income tax.
CNN Philippines reports that on December 19 President Rodrigo Duterte signed into law his long-lobbied-for Tax Reform for Acceleration and Inclusion (TRAIn) bill, now Republic Act 10963. Said new law had the double purpose of raising annual revenues by about $130 billion while at the same time significantly ease the burdens on taxpayers in their income taxation. The general gist is the tax exemption for employees and workers earning P250,000 or less annually. This also includes 13th-month pay and bonuses that equal to P90,000 and below. President Duterte performed the signing at the Ceremonial Hall of MalacaƱang Palace.
In addition to the tax exemptions, RA 10963 also includes reduced tax rates for income-earners whose annual amounts to P2 million and below. There’s also a provision regarding value-added tax (VAT), wherein small businesses are exempted from it if their total annual sales do not exceed P3 million. This is a boon on micro-small operations which comprise 98% of all registered business in the Philippines. Other tax exemptions include milk and coffee products, natural fruit/vegetable juices and medical beverages.
On the flip side, there will be tax hikes on petroleum products that will be staggered from 2018 all through 2021. Beverages with sweeteners (caloric or otherwise) are to be taxed P6 per liter while drinks with high fructose corn syrup get P12 added per liter. Lastly, tobacco excise taxes will get a P2.50 per annum raise.
Revenue gained from the TRAIN Tax will be divided as follows: 30% to education, health, nutrition and anti-hunger, social protection/welfare, employment, housing, and the sugarcane industry; 70% to an intensive building program (Marawi in particular), military spending, public school sports facilities, and putting public drinking water infrastructure for all public spaces in the country.
After RA 10963, there’s also the new national budget for next year signed by President Duterte. It is higher than the 2017 budget by 12%, amounting to P3.77 trillion in total. The division is: DepEd (₱553.3 billion), DILG (₱170.8 billion), national defense (₱149.7 billion) and the DSWD (₱141.8 billion) according to guidelines laid out in the Constitution.