Congress grants Duterte's wishes for tax reform, rice tariffication, tobacco tax hike

Heeding President Rodrigo Duterte's wishes during his State of the Nation Address (SONA) 2018, Congress passed several controversial measures following prolonged debates and negotiations.

The Tax Reform for Acceleration and Inclusion (TRAIN) Act, officially cited as Republic Act No. 10963, which was signed into law in December 2017, was the initial package of the Comprehensive Tax Reform Program (CTRP) .

In February 2019, Duterte signed the Rice Tariffication Act that allowing rice trade liberalization by lifting the limit to the volume of rice imports every year, but imposing higher tariffs on rice.

While the TRAIN law gave salaried workers higher take-home pay because of the lowered income tax of 25 percent, from the previous 32 percent, some said the extra pesos were eaten up by the increase in prices of fuels and commodities as a result of the new tax measure.

The package 2 or TRAIN 2 of the administration's tax reform program, which seeks to lower the corporate income tax  and rationalize tax perks currently being enjoyed by businesses in the country, is expected to be filed in the incoming 18th Congress. 

Another component of package 2 targets to increase the government’s share from mining operations, which Congress has yet to pass.

Also pending are package 3 to reform the property valuation system, and package 4 to rationalize capital income tax.

"Apart from TRAIN, rice tariffication, and package 2, they include the mining, alcohol, and tobacco tax increase, reform in property valuation, reform in capital income and financial taxes, and an amnesty program," Duterte had said.

"I urge Congress to take them seriously and pass them in succession, for there is no chance that we can deliver our promises without an equitable tax system," he added.

In February, Duterte signed into law the Rice Tariffication Act which removed the quantitative restrictions on rice and imposing a 35-percent tariff on imports from the country's neighbors in Southeast Asia. 

In his 2018 SONA, the President asked lawmakers to prioritize as urgent the reform in rice trade. 

"We need to switch from the current quota system in importing rice to a tariff system where rice can be imported more freely. This will give us additional resources for our farmers, reduce the price of rice by up to 7 pesos per kilo, and lower inflation significantly. I ask Congress to prioritize this crucial reform, which I have certified as urgent today," he had said.

Duterte made the call for rice trade liberalization amid spiking inflation rate last year brought by rising food prices, particularly rice amid a supply shortage of the government-subsidized commodity.

The continuing slower inflation environment was attributed to Rice Tariffication law. In June, inflation rate slowed to its slowest in 21 months at 2.7%.

Congress also passed last June the bill raising excise tax on tobacco and is now awaiting Duterte's signature.

The measure would hike excise tax on cigarettes to P60 per pack from P45 in the next four years.

The bill is seen to fill the funding gap for the implementation of the Universal Health Care law, which stands at P63 billion in 2020. —LDF, GMA News