The Comprehensive Tax Reform Package (CTRP) Or House Bill 4774 Case Analysis
The comprehensive tax reform package (CTRP) or House Bill 4774 is expected to be completely approved both by House of Congress and Senate by June 2017 of this year. This may mean that the implementation which is targeted this 2nd half of the year will push through. The response from the public and from what I heard wherever I go is mixed. There are those who welcomed it, those who are apprehensive, and those who do not know at all and take a nonchalant attitude.
The hot topics in the CTRP are the good news which are the lowering of personal income tax by increasing the coverage of exemption to P250, 000 and lowering of estate and donor tax to 6%. The bad news are mainly the excise taxes on oil and automobiles. The discussions therefore …show more content…
The DOF estimated that the increase of taxes on fuel which is now staggered from P3 a liter (presently there is no tax on diesel) in second half of this year, to P5 a liter in 2018 and P6 a liter in 2019 will only result to a P0.21 increase in the minimum fare for this second half of the year with the P3 per liter increase. Government estimates that Inflation rate for 2018 will still be within the target of 3% notwithstanding the imposition of excise taxes on …show more content…
With the increase of threshold of VAT to P3MM and the imposition of a flat 8% tax rate in lieu of VAT and percentage can be an incentive to micro and smaller enterprises to improve production and increase supply which could buffer an impact of price increase due to increase in fuel prices. The lowering of income taxes on low income earners can also increase consumption and demand which are further incentives to smaller enterprises. I am emphasizing micro enterprises because those earning P2MM and above a year (and are not microenterprises) will be imposed a 32% and those over P5MM will be imposed 35%.
In other words, the bigger businesses and manufacturers will not enjoy an incentive of lower taxes and this poses a question whether supply will really increase to counteract any increase in prices caused by the ripple effect of fuel prices.
There are also certain sectors which think that if the micro enterprise will result to a net loss, since the 8% flat rate is based on gross income, the salaried employee is better off with an exemption of P250, 000. But I should say that goes with the risk of doing business – one cannot have it
The hot topics in the CTRP are the good news which are the lowering of personal income tax by increasing the coverage of exemption to P250, 000 and lowering of estate and donor tax to 6%. The bad news are mainly the excise taxes on oil and automobiles. The discussions therefore …show more content…
The DOF estimated that the increase of taxes on fuel which is now staggered from P3 a liter (presently there is no tax on diesel) in second half of this year, to P5 a liter in 2018 and P6 a liter in 2019 will only result to a P0.21 increase in the minimum fare for this second half of the year with the P3 per liter increase. Government estimates that Inflation rate for 2018 will still be within the target of 3% notwithstanding the imposition of excise taxes on …show more content…
With the increase of threshold of VAT to P3MM and the imposition of a flat 8% tax rate in lieu of VAT and percentage can be an incentive to micro and smaller enterprises to improve production and increase supply which could buffer an impact of price increase due to increase in fuel prices. The lowering of income taxes on low income earners can also increase consumption and demand which are further incentives to smaller enterprises. I am emphasizing micro enterprises because those earning P2MM and above a year (and are not microenterprises) will be imposed a 32% and those over P5MM will be imposed 35%.
In other words, the bigger businesses and manufacturers will not enjoy an incentive of lower taxes and this poses a question whether supply will really increase to counteract any increase in prices caused by the ripple effect of fuel prices.
There are also certain sectors which think that if the micro enterprise will result to a net loss, since the 8% flat rate is based on gross income, the salaried employee is better off with an exemption of P250, 000. But I should say that goes with the risk of doing business – one cannot have it