Finance department pushing for key tax measures

The Department of Finance (DoF) is hoping several tax reform measures will be approved by Congress this year despite the upcoming midterm elections.

“The legislators have the option to do public hearings during the break. We can do the work then do just one committee meeting during the resumption to pass the committee report,” DoF Director and Organisation for Economic Co-operation and Development Representative Euvimil Nina R. Asuncion told reporters on the sidelines of an event on Jan. 8.

“We will continue working with the leadership of the House and the Senate to pass the measures.”

The 19^th Congress resumes session on Jan. 14, but will adjourn on Feb. 8 as lawmakers prepare for the start of campaign period. The campaign period for national elective posts starts on Feb. 11, while the campaign for local posts starts on March 28. The elections are scheduled for May 12.

Lawmakers will resume session on June 2 and will adjourn sine die on June 13, formally closing the 19^th Congress.

Ms. Asuncion said the DoF is pushing for the approval of the excise tax on single-use plastics (SUPs), the proposed Government Revenues Optimization through Wealth Tax Harmonization (GROWTH) bill, and reforms for the fiscal regime for the mining industry.

“Instead of doing the CMEPA (Capital Markets Efficiency Promotion Act), we want the GROWTH bill [passed] instead since it covers both capital markets and financial intermediates. Actually, all of the items that are in CMEPA are also in the GROWTH bill. The GROWTH bill is the new Passive Income and Financial Intermediary Taxation Act (PIFITA), basically,” she added.

Ms. Asuncion also said the DoF hopes Congress will approve the bill imposing an excise tax on single-use plastics.

“We’re pushing for that as well. Not just because of revenues, but we really have to start looking at our commitments on climate change… We really see it as causing plastic pollution, especially in our cities. We really have to push for a revenue measure that will really discourage the use,” she said.

The House of Representatives approved its version of the bill in November 2022, while a similar measure is pending with a Senate committee.

Ms. Asuncion said these measures should have been approved last year, and could be deliberated on by the 20^th Congress, which will open on July 28.

“That’s a new Congress again. We will have to explain the measures again and convince different people, depending on who wins in the elections,” DoF’s Ms. Asuncion said.

Albay Rep. Jose Maria Clemente “Joey” S. Salceda, who chairs the House Ways and Means Committee, said in a Viber message that tax reforms would not be delayed by the elections.

“I am not that worried about the elections. We were able to pass significant reforms during the lame duck session last time,” he said.

He noted the CMEPA bill is “well on the way,” while the proposed mining fiscal regime reform bill has a “strong chance” of getting passed before the 19^th Congress ends.

“My preference is we get the Motor Vehicle Road User’s Charge done before the 19^th Congress ends. The rates have not been updated since 2004, and it could yield substantial revenues of up to 52 billion for public transport, road projects, and other transport improvements,” Mr. Salceda said.

Tax amnesty

Meanwhile, DoF’s Ms. Asuncion said the department is looking to introduce a general tax amnesty measure.

“So right now, the estate tax amnesty is still effective. The delinquencies are down. But this is what we will look at if we were to have general tax amnesty,” she said.

“Hopefully we get to introduce it this year. Whether this Congress or the next, that is the question,” she added.

In 2019, then President Rodrigo R. Duterte signed Republic Act 11213 or the Tax Amnesty Act but vetoed the provision for a general tax amnesty due to loopholes. Mr. Duterte only retained the provisions for estate tax amnesty.

“Tax amnesty is but a one-off measure but can result in tax decline in the long run as taxpayers would think they could always avail themselves of amnesty in the future,” Action for Economic Reforms Coordinator Filomeno S. Sta. Ana III said in a Viber message. — AMCS