November 8th, 2022
The House plenary has approved on second reading House Bill No. 4102, or the Single-use Plastic Bags Tax Act, No. 4122, or the VAT on Nonresident Digital Service Providers, and No. 4339 of Package 4 of the Comprehensive Tax Reform Program. House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) is the principal author and sponsor of the measures.
“With this, the House wraps up with all the priority tax measures of the Duterte-era Comprehensive Tax Reform Program, and is ready to move on to tax collection reforms, as prioritized by the Marcos administration,” Salceda said.
The measures could yield a total of P47 billion pesos annually, according to the House tax panel chair. This includes some P19 billion from the nonresident DSP VAT, P9.3 billion from plastic bags, and P20 billion from Package 4, the bulk of which will come from removing the tax exemption in pickup trucks, and increasing the tax rates on foreign currency deposit units to 20%.
“That is around 2% of BIR collection targets, and 0.2% of GDP, so Secretary Diokno only needs to look for 0.1% of GDP more in tax collection improvement. The Medium -Term Fiscal Framework, which we in Congress approved, takes into account 0.3% of GDP in tax collection efficient improvement every year,” Salceda said.
Salceda also emphasized some key points for the measures approved by the House.
“For the digital services VAT, it will not be imposed on Filipino businesses. The emphasis is on foreign or nonresident digital service providers. All major ASEAN economies impose VAT on these entities. Tayo na lang ang hindi,” Salceda said.
Salceda adds that the plastic bags tax, which will impose an excise tax of P100 per kilo of disposable plastic bags, is in line with the country’s efforts to fight ocean pollution, especially “as we are now recognized ignominiously as the world’s biggest ocean plastic polluter.”
As for Package 4, Salceda says that the lifting of the exemption on pickup trucks “merely corrects an unfair privilege on a vehicle that is mostly for the rich, occupies very large space on the road, and is by all accounts less fuel-efficient than most other vehicles.”
Salceda expects that the measures will be approved on 3rd reading in the House by Monday or Tuesday next week.
Salceda also expects that the measures will be ready for discussion in the Senate, which is also expected to tackle the Ease of Paying Taxes Act.
“I think we will have at least one tax law enacted over the next six months, very possibly EOPT. But I am hopeful that we will have at least one more, hopefully one of these three.”
Meanwhile, the House Committee on Government Reorganization is expected to take up the Real Property Valuation and Assessment Reform Act or Package 3 of the CTRP this week. Salceda is also the principal author of the measure.