House passes bill simplifying passive income, financial taxes
MANILA, Philippines – The House of Representatives gave its thumbs up to the bill that would simplify the taxes imposed on financial investors.
Legislators approved House Bill (HB) No. 304, or the Passive Income and Financial Intermediary Act (Pifita), on 3rd and final reading on Monday, September 9, just 5 days after the tax bill was approved on 2nd reading.
A total of 186 lawmakers voted yes, while only 6 voted no. Two legislators abstained from the vote.
Under the Pifita bill, the tax rates on interest income from regular savings and short-term deposits would be decreased from the current 20% to 15%. The tax rates on interest income from foreign currency deposits and long-term deposits would also be lowered to 15%. Dividend income, meanwhile, would be fixed at 15%, except for intercorporate bonds.
The bill would also exempt non-monetary documents like diplomas, transcript of records, and school certifications from the payment of documentary stamp tax.
The Pifita bill is the 4th tranche of the Comprehensive Tax Reform Program being proposed by the administration of President Rodrigo Duterte.
Gabriela Women's Party Representative Arlene Brosas opposed the Pifita bill, arguing that "it grossly favors the rich who make fortunes out of thin air in the financial sector."
"The reduction in the final tax rate from 20% to 15% on passive income, which include stock dividends, bank deposits, and other forms of income in the capital market, disproportionately benefits big local and foreign investors and stock market players," said Brosas as she explained her "no" vote.
"Such tax rate reduction is again offset by the tax collections sourced from ordinary Filipinos via TRAIN 1, which is projected to reach P153 billion next year," she added, referring to the Tax Reform for Acceleration and Inclusion law.
The House has been prioritizing the passage of tax bills after Duterte instructed them during his 4th State of the Nation Address to swiftly approve the measures.
The bill imposing additional taxes on alcoholic drinks, electronic cigarettes, and vaping products was the first measure approved by the House on 3rd and final reading in the current 18th Congress. – Rappler.com