January 24, 2018, 3:44 am
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Coal tax to yield P2B

The proposed adjustments in the coal excise tax rate will result to a revenue gain of P2 billion in the first year of implementation according to Carlos Dominguez III, finance secretary.

The expected amount is significantly higher than the current level of P300 million a year.

Under the ratified version of the Tax Reform for Acceleration and Inclusion Act, the coal excise tax will be increased from P10 per metric ton to P50 per metric ton in the first year of implementation, P100 in the second year, and P150 in the third and succeeding years.

The P10 coal excise tax rate has remained unchanged since 1988 while the local industry has been exempted from paying excise tax since 1976.

Karl Kendrick Chua, finance undersecretary, said 80 percent of coal is used for power generation, while the remaining 20 percent is for non-power purposes.

“You have to take a look at... P2 billion in an industry that is, (earning) how much, what is the total sales of power companies?” Dominguez said.

Earlier, the finance chief was asked if the insertion of the coal tax could pose a legal question later on as this provision did not originate from the Lower House. Dominguez said the levy is not considered a new tax as the bicameral conference committee only adjusted the three-decade old coal tax rate.

“That issue was never brought up and besides, it’s not a new tax. Coal is currently taxed at P10 per metric ton, so it is actually only adjustment of a tax already existing,” Dominguez said.

“I think what that (Constitution) refers to is a totally new tax cannot be introduced other than by the House of Representatives.However, if the tax already exists, they can adjust it,” he added.
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