Phl Tax Reform update so far (Part 3)

“Thinking is one thing no one has ever been able to tax.” – Charles Kettering

About two weeks ago, I wrote about tax reform updates; I mentioned the update about automobile-related taxation but wasn’t able to include it. The bill mentioned that there shall be levied, assessed and collected an ad valorem tax on automobiles based on the manufacturer’s or importer’s selling price, net of excise and VAT.

Automobile Tax

* Under the measure, if the net manufacturer’s price/importer’s selling price is Php600,000, the excise tax will be 4 percent;

* If the net manufacturer’s price/importer’s selling price is Php600,000 to Php1.1 million, the excise tax will be Php24,000 plus 40 percent of the value in excess of Php600,000;

* If the net manufacturer’s price/importer’s selling price is Php1.1 million to Php2.1 million, the excise will be Php224,000 plus 100 percent of the value in excess of Php1.1 million; and

* If the net manufacturer’s price/importer’s selling price is Php2.1 million, the excise will be Php1.22 million, plus 200 percent of the value in excess of hpP2.1 million.

Note: Perhaps you can start buying that dream car of yours before this measure is fully implemented!

Other changes
On the relaxation of the Bank Secrecy Act, the bill authorizes the Bureau of Internal Revenue (BIR) commissioner to inquire and receive information on bank-deposit accounts and other related data held by financial institutions.

And for some reason you will win in PCSO or Lotto, you will also face a final tax rate of 20 percent.

The bill also added that the tax for each calendar year shall be 6 percent and shall be computed on the basis of the total net gifts made during the calendar year, provided that annual net gifts not exceeding Php100,000 shall be exempt.

Other improvements
In order to properly determine the correct taxes to be paid on the part of the taxpayer and the correct taxes to be collected on the part of the BIR, it has been mandated that all establishments shall issue an electronic receipt or invoice, as the case maybe, which shall be directly generated and transmitted to the BIR upon sale.

The need to institute genuine tax reform therefore comes at a critical time, as the country already faces a future where it may no longer be able to depend on its usual foreign partners, and where the world is retracing its steps from unbridled globalization.

Ours and history in general has demonstrated all too often that excessive taxation stifles productivity, causes misallocation of resources, and encourages flight of capital to less-taxed jurisdictions. A more liberal and fair tax system has the effect of encouraging capital formation and increasing domestic savings, investment and productivity, which eventually redound to higher tax revenue for the government.

To ensure future growth and development, the government should not hesitate to ease the onerous taxation currently shackling the fortunes of Filipino citizens. By doing so, state policy can finally become an instrument, rather than an obstacle, to the development of the financial strength and capability of its own people, who have been, and will always be, the pillars of this nation.

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The writer is an RFP® - registered financial planner of RFP PH, Licensed Real Estate Broker and Director of CERTA, Inc., a family estate planning and investment advisory firm. To know more, please visit www.certa.ph
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Originally Published in Philstar - The Freeman Newspaper last February 21, 2017.