MANILA — The House Committee on Ways and Means on Tuesday began tackling the proposal to increase the tax-exempt annual income ceiling from the current P250,000.
Marcos seeks tax relief for individuals, small businesses
During a briefing before the House panel, the Department of Finance (DOF) pushed for a tax reform package, dubbed ProGRESS, which consists of the President’s proposal to raise the tax-exempt annual personal income ceiling to P350,000, and remove the 2 percent minimum corporate income tax for qualified micro and small enterprises.
These reforms are estimated to benefit at least 3.13 million taxpayers and 78,000 micro and small businesses, according to the DOF’s estimates. Its impact on government revenues is estimated at P67 billion in 2027, and is seen to increase in the succeeding years.
To offset these projected losses, the DOF proposed to increase the tax on sweetened beverages using caloric sweeteners from P6/liter to P20/liter, and those using high fructose corn syrup from P12/liter to P40/liter, with an annual indexation rate of 5 percent.
The reform package also seeks to remove the tax exemption on 100 percent natural fruit juices and vegetable juices, as well as on edible ices, like ice creams and frozen yogurts.
DOF Undersecretary Karlo Adriano said these will also help address the prevalence of obesity in the country.
“Many studies have shown that the consumption of these products (100 percent natural fruit juices) are as harmful as soda,” he said.
“The more affordable the SB (sweetened beverage), the greater the consumption… The more affordable the SB, the higher the prevalence of obesity. Hence, the solution for this particular problem is the updated sweetened beverage tax,” Adriano added.
“We estimate that the consumption for SB (sweetened beverage) will decrease by around 27.2 percent , and we highlighted the carbonated beverages, which is around 70-80 percent of our consumption, it will decline by around 32 percent in terms of consumption,” he stressed.
The tax reform package also proposes higher taxes on e-cigarettes (heated tobaco products and vapor products), which will be equivalent to the tax on traditional cigarettes at P72.93 in 2027, with 5 percent indexation every year. DOF’s proposed tax on novel tobacco products is at P72.93 per 2ML and on e-cigarette devices to P150 per device.
“Very unequal ‘yung taxation of e-cigarettes, technically lower than traditional cigarettes… Many studies have shown that e-cigarettes are just as harmful as traditional tobacco," he said.
"Pinantay namin ang taxation ng e-cigarettes to traditional cigarettes at P72.93,” Adriano explained.
The tax reform package further proposes to increase the excise tax on distilled spirits per proof liter to P157.21 next year from the current P74.16, with 6 percent indexation every year thereafter.
It also proposes a P150/kg excise tax on plastic sando bags, labo bags, and sachets, with 5 percent annual indexation.
The ProGRESS package has a “wealth tax” component, which proposes a 75 percent tax on automobiles worth at least P8 million, higher than the current 50%.
It also pushes to increase the tax on aircraft, yachts/vessels for private use, as well as jewelry and perfume from 20 percent to 25 percent. The DOF also called for adjusting the motor vehicle user’s charge based on inflation.
These revenue-generating reforms are estimated to raise around P112.44 billion in 2027, if enacted and implemented. Of this figure, P88.10 billion will be from the updated tax on sweetened beverages, sin products, and flexible plastics.
ANTI-POOR?
Some lawmakers raised concerns about the proposed tax on sando bags, as well as the proposed adjustment to MVUC. The DOF said it is open for discussion.
“Dapat hindi maging anti-poor or mapinsala ang mahihirap. So ang unang-una talaga diyan is itong sando bags sa mga palengke. Alam naman natin ang gumagamit lang talaga diyan ay ang mga mahihirap, or really the lowest of the middle class… Hindi na siya ganoon ka-significant as a damage," House Committee on Ways and Means Chairperson Rep. Miro Quimbo noted.
"Baka naman pwede pag-aralan din ma-carve out ito, because really ang mas harmful ang sachet economy natin na naglipana. Maaaring alisin natin ‘yan, especially if the revenue collection is going to be small, yet napakaraming mahihirap ang tatamaan. Anyway, many of the LGUs are already prohibiting it,” he said.
“We’re definitely open to any suggestions from the legislative side,” Adriano said.
“I’m very hesitant relative to the MVUC…We expect to recover P20 billion in terms of revenue, just for 2027, pero pag tiningnan mo, karamihan ng nagrerehistro, mga may-ari ng sasakyan are also the middle class. By doubling that, I don’t want us to be accused that with the left hand, we give them tax relief, but with the right hand, we impose a different tax on another commodity that they own,” Quimbo also said.
Batangas 6th District Rep. Ryan Recto, meanwhile, asked whether the higher taxes won’t encourage smuggling.
“Is 100 percent increase on the excise tax for alcohol a little bit too high? Can we balance it, make it a little lower? From our very rough calculations now, even if we decrease it by 50 percent, it will still be revenue neutral,” Batangas 6th District Rep. Ryan Recto asked.
“The intent really is to increase the excise tax rate and make it less affordable… Alcohol consumption has some negative externalities. It causes road accidents… They have also associated this also to violence against women, among others," Adriano replied.
"Yes, it will make it more expensive, but at the same time, it’s like the government telling everyone that you should lessen your consumption of alcohol, so that we will basically reduce the negative externalities imposed by society with the consumption of alcohol,” he explained.
“For a particular industry, like cigarettes, for example, if the tax is a little too high, it might lead to smuggling,” Recto said.
“We will be doing both—one is to increase the tax rate, and at the same time strengthen the enforcement in tax administration,” Adriano said.
Albay 1st District Rep. Cielo Krisel Lagman said the exemption from tax on 3-in-1 coffee should be reconsidered.
"Sa proposal po ninyo, still exempted ang 3-in-1 coffee… Ang isang sachet ng 3-in1 coffee mayroong 4 to 5 teaspoons of sugar, and that is around 32 percent to 40 percent ng limit na sine-set ng (World Health Organization)," she said.
"Kung ang rason natin ay kasi ‘yan ang kino-consume ng mahihirap, at pantawid-gutom ‘yan, edi sila rin ang mapupuruhan sa diseases na kayo rin ang nag-present kanina. Palagay ko dapat i-reconsider ‘yan,” she said.
“Yes, we are open to suggestions,” Adriano replied.