Earlier this year, we have had thoughts about the new amendments on the income tax. Hearsays were spread throughout the entire country about how it will impact salaries. Just recently, the House of Representatives finally gave consent on the new bill that will lower income tax. Moreover, this bill aims to get more tax from products like tobacco, sweetened beverages, petroleum products, and cars this 2018.
With this reform, people earning Php250, 000.00 a year will be exempted from paying taxes. If we try and compute that, people who have monthly salaries of around Php22, 00.00 and of course lower than that would be these people.
With these changes, it is expected to generate around Php134 billion and this is to fund administrative infrastructure projects.
The Congress finally came to the conclusion of approving the consolidated version of the Tax Reform for Acceleration and Inclusion bill (TRAIN); after uncountable meetings of the bicameral conference committee, the income tax of almost 6.8 million taxpayers will now be gone. When this came to an approval, people were more than happy. Furthermore, this can ultimately help both parties in terms of finances, health, and prioritization.
Our Dearest President Rodrigo Duterte, had this bill as one of his priorities as he mentioned in his most recent SONA. So as per processes, the President should receive the final and consolidated version of this bill for either approval or veto before it takes effect.
Cars and high petroleum taxes
As mentioned earlier, taxes for cars and petroleum will be affected with this change. Why is that so? Because according to the Department of Finance, 50% of the petroleum in the country is consumed by the wealthiest 2 million families in the Philippines. Although this is the case, liquefied petroleum gas (LPG), diesel, and gasoline are kept to a minimum with the increase.
In addition, the consolidated version of TRAIN will also aid 80% of Filipino households that do not have cars; it also provides a four-tier tax scheme.
- Cars priced up to Php1 million will be taxed 10%
- Vehicles more than Php1 million will be taxed 20%;
- Lastly, cars that are more than Php4 million will be taxed 50%
Electric cars are exempted from this while hybrid cars? They’ll be taxed at staggering 50% rates. As per reports, this is to promote cleaner and friendly environments.
Sugar and sweetened beverage taxes
The bill is not only focusing on a financial aspect because if you try to think of it, the point here is to exercise and promote health awareness. The bill also imposed a tax of Php6.00/liter for sweetened beverages that use both caloric and non-caloric sweeteners. Moreover, an additional Php12.00/liter for those using high-fructose corn syrup.
Although this is the case, ALL milk and coffee products are exempted to these amendments. As well as meal replacements, natural fruit and vegetable juices, and medically-indicated beverages.
As you will notice, the bill also promotes health and well-being.
It’s true that financing is not the only concern of the government by pushing this bill through. Since tobacco tax will start increasing starting next year, this act is just one way of containing people who have vices. Tobacco excise taxes will hike at Php2.50 each year. This one will start at Php32.50 this coming 2018.
Cosmetic surgeries and enhancement taxes
Before this amendment, the original plan for excise tax increase of this field is 20%. With the new TRAIN, it’s now just down to 5%.
Although this is the case, the bill has exemptions especially to small businesses that have total annual sales of less than Php3 million from Value Added Tax (VAT). Having that said, almost 98% of all registered businesses small and micro businesses in the country will be exempted.
In addition to all this bill has to offer, it will also increase coal excise tax from Php10.00 per metric ton to Php150.00 per metric ton; this will be done in a total span of three (3) years. If we’re to compute, it’ll be increments of Php50.00 per year starting at Php50.00/metric ton in 2018.
Excise taxes for all metallic and non-metallic resources are on a hike from two (2) to four (4) percent.
Thus, this bill’s aim is to really set and hike funds for the betterment of the country and to of course aid people with their well-being and overall health.
Persons with disabilities (PWDs), Senior Citizens, and Business Process Outsourcing (BPO) will be retained, as well as VAT exemptions for agricultural and raw products, health, and education.
Moreover, buying of medications for diabetes, high cholesterol, and hypertension will be free if there are prescriptions from professional health professionals issued.