House passes reform bill, with higher tax rate for 'super-rich'

MANILA, Philippines – The House approved on 3rd and final reading the bill containing the first batch of tax reforms being proposed by the administration of President Rodrigo Duterte.

A total of 246 lawmakers voted yes to House Bill (HB) Number 5636 on Wednesday, May 31, while only 9 voted no and one abstained.

The measure was put to a 3rd reading minutes after it was approved on 2nd reading. This was possible because Duterte had certified HB 5636 as urgent two days ago, which meant the House no longer needed to observe the "3-day rule" between the 2nd and 3rd readings. 

Under HB 5636, the maximum rate of personal income tax will be reduced over time from the current 32% to 25%, except for high income earners. (READ: Duterte's tax reform: More take-home pay, higher fuel and auto taxes

Those earning P250,000 or below annually will be exempted from paying income taxes. The "ultra-rich," who comprise 0.1% of taxpayers, will be levied a higher rate of 35% from the current 32%. 

The bill was amended so that the 13th month pay up to P100,000 – up from the current P82,000 – will be tax-free. Other bonuses are tax-free as well.

The measure, however, also proposes higher excise taxes on refined petroleum products and automobiles, except for buses, trucks, cargo vans, jeeps, jeepney substitutes, and special purpose vehicles. 

An additional P10 tax per liter of volume capacity on sugar-sweetened beverages and carbonated drinks will also be imposed.

The value-added tax exemption on cooperatives will remain, but HB 5636 will lift the exemption on the following sectors:

Winnings from the Philippine Charity Sweepstakes Office lotto will be subjected to a 20% final tax as well.

With HB 5636 approved on 3rd reading, the measure will now be transmitted to the Senate, where it will go through another 3 readings before it can be transmitted to the Office of the President. The Senators, however, said earlier on Wednesday they would not pass the Palace's version of the tax reform package. – Rappler.com

Mara Cepeda

Mara Cepeda writes about politics and women’s rights for Rappler. She covers the House of Representatives and the Office of the Vice President. Got tips? Send her an email at mara.cepeda@rappler.com or shoot her a tweet @maracepeda.

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