Protests against the Philippine authorities’s tax reform measure. Photograph Credits: Bulatlat.com. Used with permission.
The pc Professionals Union (CPU) has launched a website that goals to inform Filipino taxpayers about the extra expenses they should pay based mostly on the proposed new taxes of the Philippine authorities.
Whereas the government of President Rodrigo Duterte has touted the proposed tax reform measure as a boon to the poor, who would supposedly benefit from the modifications in the revenue tax rates, varied teams have opposed the measure for imposing larger taxes on important client items that will affect the poor.
If authorized, the reform will imply a (US$0.12) per liter further excise tax on petroleum products starting January 2018. This may come on top of the 12 % value-added tax already being collected from petroleum products. Sugar-sweetened beverages could have a 0 (US$0.2) per liter excise tax. Apartments, homes, and different properties rented out at 0,000 (US$200) a month and lower will even be levied taxes.
CPU’s Dagdag Gastos (Further Expense) Calculator is a modification of the web tax calculator launched by the Division of Finance early this year to popularize the federal government’s tax reform measure. CPU explains their objective in launching the web site:
We hope that with the Dagdag Gastos Calculator, extra Filipinos will see that the promised relief supplied by the tax reform is effectively narrowed down by DOF’s insistence on value-added tax (VAT) and excise taxes that impacts everybody no matter income. Finally, extra Filipino households should shoulder added expenses to their already gravely insufficient incomes.
Just like the Department of Finance’s tax calculator, CPU’s Dagdag Gastos Calculator asks users about their taxpayer profile reminiscent of marital status, monthly salary, employer kind, and variety of dependents to find out one’s earnings tax.
However the similarity ends right here. CPU’s calculator also asks for one’s month-to-month expenses by way of food, house rental, and utilities to calculate the extra family bills resulting from the imposition of recent taxes.
Additional expenses for the poor
Let’s look at an example. If a poor head of family with four dependents within the Philippines incomes a month-to-month revenue of ,000 ($a hundred) makes use of the Division of Finance tax calculator, their outcomes will show that they are not affected by the tax reform package deal at all. They don’t seem to be levied any income tax under the current tax scheme and can still not be burdened with any beneath the brand new scheme.
Now: .00 will probably be deducted from you. Beneath the tax reform: you will give .00 for the general public!
The Division of Finance tax calculator exhibits poor folks as defined by authorities suppose tank Philippine Institute for Development Studies (PIDS) to be the least affected by the tax reform. According to the government institute, the poor are those who dwell on lower than the official poverty threshold of ,890 (US$157.Eight) per 30 days or 63 (US$5.26) a day.
Nonetheless, this doesn’t take into consideration the added burden that additional taxes would impose on those dwelling under the poverty line. In response to the government’s 2015 Family Revenue and Expenditure Survey (FIES), households with an annual income of 0,000-ninety nine,999 (US$1,200-1,999) spends 58.Eight % of their income on food, 9.6 % on house rental, 7.6 p.c water, electricity, gasoline, and other fuels, and 3.9 percent on transportation.
Using these estimates with the Dagdag Gastos calculator, we see that a poor family with a ,000 ($100) monthly revenue would actually pay a further 35.30 (US$2.70) expenses from the new taxes on high of the ,995 (US$seventy nine.90) whole expenses before the brand new taxes are imposed.
Your current bills in dwelling rental, food, LPG [fuel], transportation, and utilities might enhance!
Previous amount: ,995.00 (US$79.90)
Amount due to the tax reform: ,130.30 (US$82.60)
General further expenses: 35.30* (US$2.70)
*That is from:
– 12% VAT from home rental
– 1.6% estimated further price of food items
– 10.5% estimated increase in LPG price
– 1.1% improve in value of electricity
– 4.9% estimated transportation price hike
The tax reform also includes the elimination of most VAT exemptions and extra taxes on new autos and petroleum products.
Taking with the appropriate hand what is given with the left
A hypothetical middle-income family with four dependents earning 0,000 (US$800) a month is shown within the Department of Finance tax calculator to have drastically decreased expenses with cuts in their revenue taxes. With the implementation of Duterte’s tax reforms, earnings taxes could be decreased by P1,944.06 (US$38.88) from the current ,831.03 (US$116.6) to only ,886.Ninety seven (US$77.74).
As a result of you will have saved ,944.06 (US$38.88) you are able to do the following:
Go to the spa and relax!
Go out of city with friends and household!
Save on your insurance coverage!
But just like the previous examples, the Division of Finance tax calculator does not show the extra bills entailed by the brand new taxes. In response to the 2015 FIES, households with an annual revenue of over 50,000 (US$5,000) would spend 35.Three p.c of their whole revenue on meals, 13.2 percent on house rental, 7.9 percent on water, electricity, gas, and different fuels, and 6.9 % on transportation.
Utilizing these estimates with the Dagdag Gastos calculator shows that a center-income household with a 0,000 (US$800) income could be slapped with an extra ,091.56 (US$21.Eighty) in bills from new taxes on top of the 5,320 (US$506.Forty) in total expenses before the brand new taxes are imposed. PIDS outline middle-earnings households as those dwelling between 4 to 10 instances the poverty line: 1,560 (US$631.20) to 8,900 (US$1,578) per thirty days or ,052 (US$21) to ,630 (US$52.60) per day.
It thus becomes clear in this instance that the tax reform takes with the fitting hand what is given with the left. As independent suppose-tank Ibon Foundation claims, it’s the unemployed, underemployed, the poor, and center classes who will bear the brunt of the brand new taxes, whereas big companies will proceed to get pleasure from tax exemptions and different incentives.
What’s behind the tax reforms
The tax reform measure was shortly authorized by the pro-Duterte supermajority in the Congress decrease home with a vote of 246 in favor, nine opposed, and one abstention, awaiting only further deliberation and approval within the higher house or Senate.
This tax legislation goals to generate revenues for Duterte’s “build, build, build program that can create huge infrastructure tasks in a bid to attract extra overseas traders to the nation. The DOF expects to get up to 00 billion (US$eleven.9 billion) from the tax reform measure by 2019.