LAWMAKERS were asked to scrutinize more closely the Duterte administration’s tax-reform package, which aims to raise over P500 billion in new taxes to offset individual and corporate tax breaks of P198 billion, in the wake of findings that “regressive features”negate the benefits promised to some sectors like labor.
The Freedom from Debt Coalition (FDC), in a news statement released on Monday, acknowledged Malacañang’s efforts to reform the two-decade tax system, even as it voiced fears over the regressive effects of the five tax policy packages submitted by the Palace for Congress approval.
It warned that unless amended by Congress, the Palace proposal could end up penalizing ordinary wage-earning citizens. FDC also prodded Finance Secretary Carlos G. Dominguez III to disclose details of the administration’s tax-reform packages presented to Congress so people would know how these will impact the lives of millions of Filipinos to whom every centavo counts in their daily struggle to make ends meet.
At the same time, FDC Secretary-General Sammy Gamboa aired concerns that the tax reforms would be “based on trade-offs and compromises with corporate interests rather than principles of equity, fairness and justice.”
He warned that any increase in workers’ take-home pay due to lower individual income tax “would hardly [be] felt with higher prices of goods and services as a result of increases in excise tax on oil, which would hike fares in public transportation, and reduction of value-added tax exemptions [VAT].”
This developed after the Department of Finance (DOF) earlier bared plans to slash existing tax rates on individual and corporate income, fiscal incentives to investments, property and capital income alongside increases in excise tax on oil, property valuation and stocks traded in the stock market.
It added that exemptions from VAT will also be limited to raw food, health, medicines and education, even as the DOF, likewise, identified additional measures on sugary and fatty foods, mining, alcohol and tobacco, gambling, luxury items and carbon.
FDC noted that with the proposed five tax policy packages, the government stands to lose P198.3 billion but collect P566.4 billion in new taxes, “resulting in a net gain of P368.1 billion by 2019.”
“These figures are worrisome,” Gamboa said. “Net gain from the trade-off between lower personal income tax and higher excise tax on oil, lesser VAT exemptions and new levies on sugary and fatty foods will be P220.7 billion.”
Meanwhile, he added, “there will be a P1-billion net loss from the swap between lower corporate income tax and rationalization of fiscal incentives. This means that Duterte’s new revenue-generating measures will be borne mostly by salaried workers!”
Moreover, Gamboa noted that public-transportation subsidies and the Conditional Cash Transfer Program would not be enough to cushion the effects of price hikes, stressing livelihood assistance and employment for affected sectors should be assured and could be funded by earmarking proceeds of the increased tax on oil for this purpose.
“We need to know,” he said. “The public deserves to be consulted. Will the proposed revenue measures facilitate economic gains to ‘seep through’ or will it force hard-earned money to pour out of ordinary people’s pockets?” Gamboa said, in allusion to the Duterte administration’s promise of equitable prosperity for all.
Butch Fernandez is BusinessMirror’s senior political reporter based at the Senate. He has covered Malacañang (3 presidencies), the Office of the Vice President, the Senate, local governments and defense since 1984.
