Duterte: 2018 budget, TRAIN govt's biggest Christmas gift to Filipinos

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(File photo)

Metro Manila (CNN Philippines, December 19) — President Rodrigo Duterte signed the 2018 General Appropriations Act (GAA) and the Tax Reform for Acceleration and Inclusion Act (TRAIN) Tuesday, calling it "the administration's biggest Christmas gift to the Filipino people."

In a speech at Malacañang, the President said 99 percent of taxpayers would benefit from what he said was a "simpler, fairer, and more efficient" tax system.

Duterte described the 2018 budget as "credible" and added it would be supported by the comprehensive income tax reform program embodied by the TRAIN.

President Duterte rarely holds signing ceremonies like this, and seeing him do this for the next year' s budget and the TRAIN is a clear indication of the importance he has given to these measures.

 

Next year's ₱3.77 trillion budget was ratified by Congress on December 12 - and amount 12 percent more than the 2017 budget.

As mandated by the Constitution, the Education Department will get the biggest share with ₱553.3 billion. Next are the Department of the Interior and Local Government with ₱170.8 billion, the Department of National Defense with ₱149.7 billion and the Department of Social Welfare and Development with ₱141.8 billion.

READ: Duterte signs tax reform bill, 2018 budget into law

The 2018 national budget would support infrastructure development and free education in state universities and colleges, universal health care, free irrigation, and the maintenance of peace and order across the country – and would fulfill the President's campaign promise of doubling the pay soldiers and police officers.

RELATED: Bato: Rookie cops' pay to double by January 2018

The second is the tax reform bill, which Congress ratified on December 13 and is set to take effect on January 1, 2018.

Under the measure, those earning ₱250,000 or less a year would be exempt from income tax, while 13th month pay and bonuses up to ₱90,000 would also be tax-free.

Budget Secretary Benjamin Diokno said the adjustment in take-home pay of workers covered by the tax reform bill would be reflected in their first paycheck of 2018.

The new scheme will also lower income tax rates for those earning ₱2 million and below.

Meanwhile, small businesses with total annual sales of ₱3 million and below are exempt from value added tax. Small and micro businesses represent 98 percent of all registered businesses in the country.

President Duterte did not discuss how the tax measure would impact poor Filipinos considering the increases in excise tax on consumer goods, however Presidential Spokesperson Harry Roque said the TRAIN Law itself would cushion the impact of indirect taxes through cash aid for 10 million poor households in the country

Roque was referring to the ₱200 monthly cash assistance to be given to poor families next year. In 2019 and 2020, this will be increased to ₱300.

When asked if this was enough, Roque said, "I believe so because as I read out the computation, many of the new excise taxes would not really amount to much because really, the amount of taxes that you pay is dependent on your consumption as well and if you are marginalized, the consumption is very low...So we have provided for mitigation, realizing that the poorest of the poor would need some kind of assistance as a result of TRAIN."

However, the bill hikes taxes on petroleum products, as well as various consumer goods like sugar, sweetened beverages, and coal which could lead to higher electricity prices.

The President thanked lawmakers for the swift and timely passage of the laws and also gave directives for the next tax package he wants passed.

He said, "The passage of 2018 GAA and TRAIN is not just a victory for the legislative and executive branches of government, it is a victory for our people."

CNN Philippines Senior Correspondent Ina Andolong, and Digital Producers Chad de Guzman, VJ Bacungan, and Pia Garcia contributed to this report.