THE League of Provinces of the Philippines on Tuesday expressed opposition to Part B of the Tax Reform for Acceleration and Inclusion (TRAIN) law, which seeks to grant tax amnesty.
At a hearing of the House Committee on Ways and Means, Angelica Sanchez, director for Policy Development of the League of Provinces of the Philippines, said the Local Government Code of 1991 and the 1987 Constitution already vested in local governments the power to impose local taxes.
Local business tax amnesty and real property tax amnesty are part of Part B of Package 2 of the TRAIN, which seeks to grant amnesty on all unpaid internal revenue taxes while relaxing the bank secrecy law.
Under the bill, a Real Property Tax (RPT) Amnesty is granted to the following real property taxpayers as of December 31, 2017 and prior years: those who have undeclared real properties (40 percent of basic RPT); those who have unsettled real property taxes (50 percent of basic RPT); and those whose real properties are subject of public auctions by the local government units (60 percent of basic RPT).
Also, the bill provides that any person may avail himself/herself of the Local Business Tax Amnesty granted under this proposal by filing with the appropriate LGU an application for the LBT Amnesty in accordance with the form prescribed by the IRR of this bill.
It added any business entity may enjoy the immunities and privileges of the LBT Amnesty under the proposal, upon the payment of LBT Amnesty tax at the rate of 40 percent of the basic local business tax due: Provided, that those with pending cases for unpaid, undeclared and under protest local business tax shall be subject to an amnesty rate of 50 percent.
All the incremental revenues from these Real Property Tax and Local Business Tax would still go to LGUs.
“We do really apologize that we cannot support these portions [parts of Part B of TRAIN law] especially as we have to go back to RA 7160 or the Local Government Code particularly section 132 on local taxing authority,” Sanchez told lawmakers.
Under Section 132 of the Local Government Code, the power to impose a tax, fee, or charge or to generate revenue under this Code shall be exercised by the sanggunian of the local government unit concerned through an appropriate ordinance.
“I do not think imposing a local tax amnesty would really answer the question. The problem of LGUs is that we only have one basic local tax and that’s the real-estate tax and what we are collecting from real-estate tax is not really that large, but that’s a different story,” Sanchez added.
Nonetheless, she said the League of Provinces will keep its mind open and will study the proposal further.
For his part, Iloilo Rep. Arthur D. Defensor Jr. noted that Congress has the power to amend the Local Government Code anytime.
Meanwhile, House Committee on Ways and Means Chairman Dakila Carlo E. Cua of Quirino said the committee will conduct more consultations with local government officials.
“We are offering our helping hand to help them administratively because if there are [account receivables that are piling up], this is one way of cleaning it up, so if they welcome the ideas we will proceed,” he said in an interview.
“During our consultations with taxpayers, they said they welcome the idea of tax amnesty for local business and real-property taxes, so we are attempting to consider it. But we cannot do this unilaterally,” he added.
While he respects the LGUs, Cua said the taxing power of the LGU is a devolved power from the state.
“We’re not trying to encroach on their power but we are trying to see if there are workable solutions that may be beneficial both to the LGUs and the taxpayers. [And under the bill] all the incremental revenues will go back to the LGUs,” he added.
Part B
Meanwhile, “Part B” will grant amnesty on all unpaid internal revenue taxes imposed by the national government for taxable year 2017 and prior years.
According to Cua, this measure is needed as the Philippines has experienced poor tax collections in previous years. He said the proposal was designed to combat corruption, simplify taxation and improve tax collection.
Aside from giving the government flexibility in collecting taxes and immediate revenues, Cua said the bill also seeks to expand the taxpayer base.
Whether disputed and uncollected taxes are caused by erroneous assessment or by the fault of the taxpayer, the lawmaker said it is time to move forward, and provide taxpayers the opportunity to be responsible by offering them a clean slate.
Finance Secretary Carlos G. Dominguez III has said the amnesty package covers two-thirds of what the government proposed under the first package of its Comprehensive Tax Reform Program (CTRP) of the Duterte administration.