PUBLIC-ADVOCACY groups Action for Economic Reforms (AER) and the Foundation for Economic Freedom (FEF) fear President Duterte would not have the financial resources to pursue his plans and programs as a result of continued legislative inaction on the Chief Executive’s Comprehensive Tax Reform Program (CTRP).
The CTRP, under House Bill (HB) 4774, has become moribund and has failed to get the approval of the House Committee on Ways and Means before legislators pause for a break in mid-March.
The cornerstone legislation seeks to reduce the personal income tax, broaden the value-added tax base, and increase the excise on cars and oil product.
It was noted the tax-reform programs under Presidents Benigno S. Aquino III and Gloria Macapagal-Arroyo generated revenues equal to 0.6 percent and a little over 1 percent of local output or the GDP, respectively.
“Despite many meetings, including redundant ones, since the second half of 2016, Rep. Dakila Carlo E. Cua, [House] Ways and Means Committee chairman, did not call for a vote to submit the bill for second reading. He pulled back, perhaps because he was waiting for the Speaker’s okay, despite the indication that the majority in the meeting would have voted for the bill. To move forward, the committee resolved to form a technical working group [TWG]. Weeks have gone by, and the TWG has yet to be created,” said AER Coordinator Filomeno Sta. Ana III.
The AER criticized Cua for engineering the passage of HB 4144 on tobacco taxation that the group considers weak by having nominally higher rates and two tiers, instead of the best practice of making cigarettes less affordable through significantly higher taxes and having a single rate.
Despite the Department of Finance and the Department of Health (DOH) objecting to the passage of HB 4144, Cua and the House leadership passed the bill in just two weeks.
While the DOF pushed for the CTRP since September 2016, both Undersecretary Karl Kendrick T. Chua and Albay Rep. Joey S. Salceda went around the country on a road show to explain the rationale and features of the CTRP package. The AER and the FEF, likewise, reached out to different multi-stakeholders to get support for the bill.
Alyansa Agrikultura, Rural Urban People’s Linkages, National Federation of Labor Unions and Renato Reside of University of the Philippines School of Economics have, likewise, signed the unity statement pushing for the immediate passage of the bill in its uncompromised form.
“Indeed, Mr. Cua has been looking for excuses to delay the bill’s passage. He has, for instance, used the contrarian position of the Department of Social Welfare and Development [DSWD] to prolong the debate. In the last two meetings of the Ways and Means Committee, the DSWD’s senior officials expressed their deep reservations, to quote Secretary Judy M. Taguiwalo, over the bill. Secretary Taguiwalo only endorsed the reduction of the personal income-tax rate. But she stood against the other essential features, including the unconditional cash transfers. The cash transfers are designed to offset the low inflationary impact arising from the excise tax on oil products and the broadening of the VAT coverage,” Sta. Ana added.
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