By Butch Fernandez & Jovee Marie N. dela Cruz
Lawmakers on Wednesday vowed to oppose the plan of the next administration to increase the value-added tax (VAT) to 15 percent, saying this would further erode the purchasing power of Filipinos.
Rep. Romero S. Quimbo of the Second District of Marikina, chairman of the House Committee on Ways and Means in the 16th Congress, said raising the 12-percent VAT will hurt the poor. “We must make sure that any increase in VAT will not be regressive, that it’s not the poor that will get hit the most. As it is, the poor gets hit the most by VAT. We cannot allow this to happen,” Quimbo said.
Sen. Juan Edgardo M. Angara, who chaired the Senate Ways and Means Committee in the 16th Congress, said the country’s current VAT rate is already the highest in the region.
“Now is the time to do a thorough review before taking the big step that would raise the VAT rate,” Angara said. “We can also review the list of exemptions from VAT coverage and identify the transactions that should no longer be exempted from VAT,” he added.
For his part, Sen. Panfilo Lacson said the administration of President-elect Rodrigo R. Duterte should give priority to reversing underspending before thinking of imposing higher taxes.
“VAT hits mostly the ‘hoi polloi’ being a consumers’ tax. Big business won’t mind since they will simply pass on the burden to the buyer,” Lacson said.
However, lawmakers said the 17th Congress could take up proposals for a VAT increase if it will be accompanied by a remedial legislation reducing income tax rates.
Sen. Vicente C. Sotto III said most senators, anticipating widespread negative public reaction to government tax hikes, would be more supportive of a give-and-take formula in the form of a companion tax-relief measure.
“The country’s income tax is at 32 percent. It would be more acceptable to the people if it would be reduced even if you raise the VAT,” Sotto told reporters at a Senate media forum on Wednesday.
Sotto said a panel of senators and representatives will meet with Duterte administration officials shortly after the 17th Congress convenes on July 25 to take up his proposal to lower income-tax rates.
“We’ll discuss that in the Ledac,” Sotto said, referring to the Legislative-Executive Development Advisory Council.
He added the congressional panel will also discuss the lower income-tax proposal with the Department of Budget and Management.
“How much are we going to save if we lower income tax? There should be a study on that. How much will the government collect if the VAT is raised? If the plan is only to increase VAT, then I’m against it,” Sotto said. For his part, Quimbo said lowering individual income- tax rates is “long overdue.”
In the current setup, Quimbo noted that those earning P10,000 or less per month pay a 5-percent income tax, while those with yearly earnings of P500,000 and above pay a 32-percent income tax.
Among the 10-member countries of Asean, the Philippines has the highest tax rate at 32 percent, after Thailand and Vietnam.
The House of Representatives failed to pass a bill lowering individual and corporate-tax rates following the strong opposition of Malacañang to the tax-reform proposal.
President Aquino, citing the Department of Finance (DOF) and the Bureau of Internal Revenue, said the government “cannot put our fiscal sustainability and credit rating at risk by doing piecemeal revenue-reducing legislation.”
The DOF has said the proposal may cause the government to lose revenues totaling as much as 1.5 percent of the country’s GDP or P30 billion.
Image credits: Nonoy Lacza
1 comment
Didn’t president-elect Rodrigo Duterte promised not to burden the people with excessive taxation. Tapang… Malasakit? VAT is a big burden to the consumers and everybody is taxed through VAT no matter what. This should not push through. Unless, of course, Duterte was just joking again.