Increased taxes on sugar products and other fatty food, luxury cars and gambling, among other things would allow the government to provide subsidies to poor families in war-torn regions such as the Autonomous Region in Muslim Mindanao, Finance Secretary Carlos Dominguez III said in a statement on Sunday.The comprehensive tax reform package being firmed up by the department is targeted to generate 600 billion pesos (Bt439 billion) in revenue by 2019, of which 400 billion pesos would come from new tax reform measures, the statement said.The rest would come from more effective efforts to curb smuggling and corruption in the Customs Bureau, among other collection agencies.The first tax policy package, targeted for passage next year, would reduce the maximum personal income tax rate to 25 per cent from 32 per cent at present over time, except for the highest income earners, and shift to a simpler modified gross system.Widening of VAT baseTo compensate for forgone revenues from the lower personal income tax estimated at 139 billion pesos, the administration proposes to expand the value-added tax base by limiting exemptions to raw food and other necessities such as education and health; increase the excise tax on petroleum products and index it to inflation; levy a 5-peso-per-kilogram tax on sugar products (domestic raw sugar, refined sugar as well as imported sugar and sugar substitutes); relax bank secrecy in fraud cases and include tax evasion as a predicate crime to money laundering.A second tax reform package eyed for passage also next year would reduce the corporate income tax rate over time to 25 per cent from 30 per cent at present but target improved compliance, while rationalising the fiscal incentives being given to investors.A third package targeted for passage in 2018 would lower the rate of estate and donor's taxes, as well as transaction taxes on land (DST, transfer tax and registration fees), while bringing the valuation of properties closer to market prices.A fourth tax policy package, eyed for passage in 2019, would cut the tax on interest income earned on peso deposits and investment to 10 per cent from 20 per cent at present.To compensate, the government plans to harmonise capital income tax rates for dollar deposits and investment, dividends, equity, as well as fixed income rates towards 10 per cent, while also increasing the tax on stocks traded in the stock market to 1 per cent on gross selling price from 0.5 per cent at present.Besides the four packages, other new revenue-generating measures being eyed by the Duterte administration include a "fatty food tax"; luxury tax on cars, jewellery and yachts; mining taxes; carbon tax; casino and lottery tax; and revisiting the "sin" taxes on tobacco and alcohol products.

Source: The Nation Bangkok September 12, 2016 11:26 UTC