By Jovee Marie de la Cruz, August 28 2019; Business Mirror
Image Credit to Business Mirror
THE House Committee on Ways and Means approved on Tuesday the fourth package of the Duterte administration’s Comprehensive Tax Reform Program (CTRP), which seeks to make passive income and financial intermediary taxes simpler and more efficient.
In approving House Bill (HB) 304 the “Passive Income and Financial Intermediary Taxation Act of 2019” at the committee level, the ways and means committee chaired by Albay Rep. Joey Salceda invoked House Rule 10, Section 48, which allows a one-day hearing only on certain bills.
Salceda said HB 304, which he principally authored, will now be transmitted to the plenary for deliberations.
Under Section 48 of the House Rule 10, “in case of bills or resolutions that are identified as priority measures of the House, which were previously filed in the immediately preceding Congress and have been approved on third reading, the same may be disposed of as matters already reported upon the approval of majority of the Members of the committee present, there being a quorum. The committee secretary shall immediately prepare the necessary committee reports on said measures for inclusion in the Calendar of Business.”
Moreover, Salceda said the “Passive Income and Financial Intermediary Taxation Act of 2019” which seeks to make taxation of the sector simpler, fairer and more efficient, will give the government P4.2 billion in revenues.
The bill also reviews the taxes imposed on financial intermediaries and the products they offer: on savings and investments; and debt and equity instruments.
Under the bill, interests, dividends and capital gains will be levied with a unified income tax rate of 15 percent. According to the bill, unifying and lowering the tax rates on interest income will benefit 75 percent of deposit account holders who are mostly small savers, correcting the inequitable distribution of the tax burden.
The bill also said preneed, pension, and life insurance will be levied a uniform rate of 2 percent.
According to Salceda, various nuisance documentary stamp taxes (DSTs) will also be removed.
The lawmaker said his committee approved the motion of Baguio Rep. Mark Go to exempt from DST nonmonetary documents diplomas for 1.2 million college graduates per year and 6.5 million primary, junior secondary and senior secondary transcript of records and other school certifications.
Salceda also said the Oath of Office, which covers 650,000 barangay officials and other elective officials before assumption of office, will also be exempted from DST.
“[The DST of] Good Moral Standing Certificate required by PRC [Professional Regulation Commission] for 4.1 millions of professionals for every 3 years and affidavits like affidavit of loss and other certificates/notarized documents, proxies, Certificate of No Marriage Record, baptismal certificate and marriage license [will also be removed],” he said.
This exemption translates to about P450-million forgone government revenue, Salceda added.
Salceda said the poor and the middle class will benefit from this bill as tax on savings will be reduced.
Under the bill, the tax on savings will go down from 20 percent to 15 percent. Meanwhile, the rich who invest in dividends will pay 5 percent more in taxes.
Finance Undersecretary Karl Chua said Package 4 aims to harmonize the country’s current 80 financial tax rates to 41 and repeal 32 out of the 41 special laws that allows special rates and exemptions.