Chairperson, Senate Committee on Ways and Means (March 11, 2020)
I welcome President Rodrigo Duterte’s certification as urgent the Senate’s version of the Corporate Income Tax and Incentives Rationalization Act (CITIRA).
This Presidential directive underscores the urgency to forge a more fair, efficient, and accountable tax system – one that should foster a stronger economy amid the many challenges our country is facing.
The certification also affirms the position earlier taken by our top economic managers, finance experts, and various business organizations fully backing SBN 1357.
The Senate version of CITIRA is a result of the successive discussions our committee conducted with investors to address their concerns. And what we repeatedly heard from various stakeholders is that we need to pass this measure.
Like the President, I am hopeful that passing CITIRA will end all uncertainty, assure investors of a more level playing field in terms of doing business in the country, and lead to a brighter and more sustainable future for all Filipinos. #
Senate Ways and Means Chair Pia S. Cayetano on Wednesday (August 21) said she is inclined to go with the Department of Finance’s (DOF) proposal to raise excise taxes on alcoholic beverages, with the goal of generating more funds for the Universal Health Care (UHC) Program.
“Technically, I have not adopted anything yet. But I have an open mind to go towards the version of the DOF,” the senator said during the Kapihan sa Manila Bay press briefing in Cafe Adriatico, hosted by journalist Marichu Villanueva.
This was in reaction to questions on whether her committee would push for higher sin taxes on alcohol compared to the recently approved House version of the measure.
House Bill No. 1026 was passed on third and final reading on Tuesday (August 20), seeking to impose higher excise taxes on alcohol, heated tobacco, and vape products.
The measure proposes to increase specific taxes on distilled spirits to P35 per liter in 2020, with an ad valorem tax of 22 percent. It also seeks to hike specific taxes on fermented liquors to P32 per liter starting 2020.
The DOF, however, wants to pass a higher version of excise tax rates on alcohol products.
Under their proposal, specific taxes on distilled spirits will be raised to P40 per liter starting 2020, with an ad valorem tax of 25 percent; while specific taxes on fermented liquors, including alcopops, will be raised to P40 per liter by 2020.
The DOF version is targeted to generate P33 billion worth of revenues to fund the UHC program. This is double the amount that the House version is expected to collect, which is P17 billion in one year.
“The primary objective of [increasing excise taxes on sin products] is to support our Universal Health Care program… That’s where my passion is coming from to make these [tax reforms] happen,” Cayetano said.
“If it will be brought to my attention that it’s excessive and not reasonable, then we will have to adjust. But until then, those are the figures that I am looking at,” she added.
Meanwhile, the senator assured that her committee will give all stakeholders the opportunity to explain their position in the Senate hearings before she finalizes the committee report.
“Ang goal ko is to have hearings every week. I just want to be sure that all the stakeholders have a chance to be heard on record,” she stressed.#
Improving the government’s delivery of services to Filipino families is the primary goal of reforming the country’s tax measures, Senator Pia S. Cayetano reiterated on Wednesday (August 21).
“We’re passing taxation measures not because it is being imposed upon us by any international body. We’re in a position where we are cleaning up our [own] house, not because we have to but because it’s the best thing to do,” Cayetano told media members at the Kapihan sa Manila Bay in Cafe Adriatico, hosted by journalist Marichu Villanueva.
The senator currently chairs the Senate Committee on Ways and Means, which is tasked to tackle the Comprehensive Tax Reform Program (CTRP) as part of government’s effort to achieve its targets under the United Nations’ Sustainable Development Goals (SDGs).
The CTRP includes proposals seeking to lower the corporate income tax (CIT) and rationalize tax incentives of businesses (Package 2); impose higher excise taxes on alcohol products and e-cigarettes (Package 2+); reform the property valuation system (Package 3); and rationalize capital income taxation (Package 4).
Cayetano said she plans to conduct a hearing every week to discuss the tax measures. The panel’s discussion on hiking excise taxes on alcohol is set to resume next week, followed by two to three more hearings on e-cigarettes and vape products.
“I want to be sure that all stakeholders have a chance to be heard on record,” Cayetano noted.
The senator said her primary duty as ways and means chair is to ensure that the government will generate enough revenues to fund its social services on health, education, and the environment.
Package 2+ in particular seeks to bridge the current funding gap of the Universal Health Care (UHC) Program.
“Our UHC program is moving forward. But I really want to see it further funded. That’s where my passion is coming from to make these [tax reforms] happen. We want to be able to help our people feel the effects [of UHC],” Cayetano said.
“At the end of the day, taxation is not just to raise funds. It’s also to protect the health of Filipinos,” she added.
Package 2: CITIRA bill
Meanwhile, the senator said she is also keen on proposals to lower the country’s corporate income taxes (CIT) and rationalize incentives given to investors.
“We have one of the highest tax rates in corporate Asia. That paints a not very inviting picture to investors. If we want to be competitive with our ASEAN neighbors, one thing that we can do is to reduce the corporate income tax rate,” Cayetano cited.
She said the government is also losing revenues due to the gaps in our policies on granting incentives to different businesses.
“We have so many agencies offering different kinds of [incentives] packages. Tayo lang pala ang may forever. In other countries, they put a timeline. And despite our incentives, we are still not the go-to place of investors in Southeast Asia,” Cayetano said, stressing the need to rationalize such grants.
Package 3: reforming the Property Valuation System
Another tax measure awaiting passage is Package 3 of the CTRP, which seeks to introduce reforms to develop “a just, equitable, and efficient real property valuation system.”
Cayetano stressed that the country’s outdated property valuation system is “impairing our ability to conduct business well.”
“Imagine, hindi natin nalalagay sa tamang value ang mga [land resources] natin. That’s something that I do hope we can address through a tax reform measure,” she said. #
Senator Pia S. Cayetano has called the attention of distributors and sellers of flavored alcoholic drinks called “alcopops” for using unethical and illegal marketing schemes to entice young Filipinos to buy their products. Alcopops are flavored alcoholic beverages, a variety of which is packed in colorful foil pouches similar to juice beverages. “I was very bothered when I found out about it. It’s packaged in a very colorful packaging that is very attractive to kids,” Cayetano stressed during the Senate Ways and Means Committee’s organizational meeting on Thursday (August 15). During the hearing, the Department of Finance (DOF) presented an overview of the remaining tax packages under the Comprehensive Tax Reform Program (CTRP), among which is the proposed increase in the excise tax on alcohol products. “I accepted the chairmanship of the Committee on Ways and Means precisely to be able to see through the delivery of public services that I’ve always dedicated my time and energy [to],” said Cayetano, who chairs the panel. The senator particularly expressed concern over the increasing consumption of alcopops among Filipinos. DOF figures show that Filipinos spent P69 million for alcopops in 2018, more than twice higher than the P30 million consumed in 2017. A particular brand of alcopops is currently being sold at P25 per 200 ml pack and has an alcohol content of 7 percent. Under the current tax rates, its total excise tax is only P1.30 per pack. The DOF is proposing to increase its tax rate to P8.00 per pack. Cayetano for her part decried the easy access of young children to the alcoholic drinks, which are being sold alongside regular non-alcoholic drinks in groceries and even online. Apart from this, the colorful packaging also makes it appealing to minors. As such, the senator called for the products to be pulled out of store counters and for the Food and Drug Administration (FDA) to regulate the packaging, distribution, and sale of such alcoholic mix beverages. “We’re trying to sell a product that has 7 percent alcohol and is packaged to make it very attractive to children. It is unethical and unlawful,” she said. “Nananawagan ako sa mga matitino at maaayos na businessmen. Siguro naman sa sarili niyong anak, hindi niyo ipapainom ‘yan,” she further stressed. The senator, who earlier fought for the passage of the Sin Tax Reform Act of 2012, noted that a similar issue was raised in the Senate about how the marketing schemes of certain tobacco companies enticed the youth to try cigarettes. #
“The time is right to re-study our tax rates and incentives.” Senate Ways and Means Committee Chair Pia S. Cayetano said this on Thursday (August 15), following the panel’s organizational meeting to discuss the Duterte government’s Comprehensive Tax Reform Program (CTRP). Cayetano heads the Senate body tasked to tackle the remaining tax proposals under CTRP, including Package 2, which seeks to lower corporate income taxes (CIT) and rationalize incentives given to investors. “I do believe that the time is right to study the rationalization of our corporate holidays and various incentives so that we can prioritize the corporations that are really contributing to our sustainable economic growth,” she stressed. The senator said the ultimate goal is to come up with a measure that would generate the needed funds for programs that will benefit Filipino families, especially those belonging to the vulnerable sectors. Furthermore, she said ensuring the people’s access to basic social services would allow the country to fulfill its commitment to the United Nations’ Sustainable Development Goals (SDGs), which serves as a blueprint in achieving a more sustainable future for the country. Package 2 of the CTRP proposes to lower the country’s CIT rate from 30 to 20 percent. It also seeks to rationalize incentives being given to companies investing in the country, to ensure that such advantages granted to them can generate domestic growth and employment for Filipinos. “Very clear naman ang presentation ng Department of Finance (DOF). Compared to other countries in the region, the Philippines has a high taxation rate. The objective is to lower that rate to make us more competitive and so that we will have more jobs,” Cayetano stressed. “We should also not grant incentives to businesses that are not really contributing to our economy,” she further said. On the other hand, the senator assured all concerned sectors that her committee would consider all positions, including those of her fellow senators, before finalizing the committee report and passing a tax reform bill in the Senate. “We intend to have weekly hearings [to discuss all tax measures]. Kailangan mag-double time kaming lahat,” she said. The Ways and Means committee is set to conduct its second hearing on Tuesday (August 20), which will primarily focus on Packages 2 and 2+ of the tax reform program.#
Senate Ways and Means Committee Chair Pia S. Cayetano is set to lead the body’s organizational meeting on Thursday (August 15) to discuss an overview of the government’s tax reform measures.
The meeting will focus on the Comprehensive Tax Reform Program (CTRP), a primary component of the Duterte government’s strategy to achieve its growth targets under AmBisyon 2040, and the United Nations’ Sustainable Development Goals (SDGs).
Resource persons from different government agencies were invited, including officials from the Department of Finance (DOF); Department of Budget and Management (DBM); Department of Health (DOH); Department of Trade and Industry (DTI); Department of Labor and Employment (DOLE); Department of Environment and Natural Resources (DENR);
The National Economic and Development Authority (NEDA); Bureau of Internal Revenue (BIR); Bureau of Customs (BOC); Bureau of Local Government Finance (BLGF); National Tax Research Center (NTRC); Housing and Land Use Regulatory Board (HLURB); and Bangko Sentral ng Pilipinas (BSP).
The department officials are expected to discuss President Rodrigo Duterte’s 10-point socioeconomic agenda, in relation to pursuing the remaining tax reforms under CTRP, following the passage of the Tax Reform for Acceleration and Inclusion (TRAIN) Law in 2017.
The remaining packages include the Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) bill, also known as Package 2, which seeks to lower the corporate income tax (CIT) and rationalize the tax incentives given to businesses in the country.
An additional component of the second package is the Sin Tax Reform bill (Package 2+), which seeks to impose higher excise taxes on alcohol products and e-cigarettes.
Cayetano said Package 2+ is an important health measure that will not only discourage the consumption of unhealthy products among Filipinos, but will also help fund the government’s Universal Health Care (UHC) Program.
The other CTRP proposals will also be generally discussed during the hearing, which include reforming the property valuation system (Package 3); and rationalizing capital income taxation (Package 4).
Furthermore, Cayetano said she will ask officials of the executive department to provide updates on the TRAIN Law to assess whether it has achieved its purpose of funding the government’s social services and infrastructure programs for the benefit of the poor. #
As chair of the Senate Ways and Means Committee, it is my job to present to my colleagues all the information they need to make an informed decision on the priority tax reforms of the Duterte government.
I believe that the 15-18 months timetable projected by Finance Secretary Carlos Dominguez III will give our committee and my colleagues reasonable time to study and vote on the four priority measures*.
This would require regular hearings and consultations with our economic managers, tax experts, and all concerned sectors. The process would be tedious, but I have been preparing myself for the challenge of getting the job done.
On the other hand, I don’t want to give my colleagues the impression that I am rushing them. Having said this, I am aware that the Department of Finance team has made themselves available for senators who would want to have access to relevant data and technical information.
I have started consultations with the DOF, and I plan to hold an organizational meeting next week, now that the members of the Committee have been nominated and approved in plenary. #
*Statement in reaction to Finance Secretary Carlos Dominguez III’s projection that it would take the House and Senate 15-18 months to deliberate and vote on four tax reform measures of the Duterte government for the 18th Congress:
Comprehensive Tax Reform Program Package 2: Comprehensive Income Tax and Incentives Reform Act
Package 2+ Sin taxes for universal health care
Package 3 Real property valuation reform
Package 4 Passive income and financial intermediary tax
In past Congresses, I focused on the delivery of social services like education and health. Now, I have the opportunity to continue this advocacy from a finance perspective.
As chair of the Senate Ways and Means Committee, I look forward to working with our counterparts in the House of Representatives and our economic managers led by the Finance Department in exploring ways to fund social services for our people.
I have started consultations with the DOF and soon will conduct hearings, open to all sectors. Our goal is to ensure steady, sustainable development to uplift the lives of the Filipino families.#