A lot of people wonder why we need to pay taxes. Aside from the fact that it is considered an inherent duty, the money that you pay for taxes goes to many places. Your taxes help pay government workers and ensure that the roads you travel on are well-maintained and safe. It also funds public libraries, parks, state colleges, and is used to assist the poor and less fortunate.
This 2018, the tax bill has been updated; therefore, if you are using a payroll management system, you need to upgrade it to comply with the Tax Reform for Acceleration and Inclusion (TRAIN) Law. Here are the 5 changes that the TRAIN law will bring to overhaul the country’s 20-year-old tax regime to make the system better.
Lower personal income taxes
According to the Department of Finance (DOF) 83% of taxpayers in the Philippines fall under this bracket. Those earning P250, 000 and below annually will be exempted from paying personal income taxes. The burden of citizens with low income will now be shifted to the “ultra-rich”.
Higher taxes for oil products
Since personal taxes will be lowered, the revenue collected by the government will be affected. The DOF proposed that these taxes be taken from other sources instead. These include oil products such as diesel and petroleum.
Removal of VAT exemptions
There are establishments and services that are excluded from paying VAT such as: lease for residential units, low-cost public housing, power transmission, boy scouts and girl scouts organizations, domestic shipping importation, and those found in special laws. This does not include those for senior citizens or PWDs.
Taxes on cars and automobiles
Cars and automobiles’ taxes will experience a surge in their already existing excise taxes. The excise tax will depend on the manufacturer’s net selling price of the car. This will lead to an increase in final selling prices.
Additional taxes for sugary drinks
Drinks such as powdered juices, energy drinks, sodas, iced tea, coffee, and other beverages that contain sugar will have an additional tax of around P10.00 per liter.