PNoy closed to tax cuts
DESPITE mounting calls for a reduction in personal and corporate income tax rates, President Benigno Aquino III is firmly not keen on enacting such a measure because of its long-term effects on the economy, Deputy Presidential Spokesperson Abigail Valte said Saturday.
“There are many groups supporting some form of lowering the income tax. However, that has to be studied carefully,” Valte said in a radio interview over state-owned Radyo ng Bayan.
“I think the main consideration of the President is the possible long-term impact of that kind of proposal on the finances of the government,” she said.
She said Aquino met Senator Juan Edgardo Angara and Marikina Rep. Romero Quimbo, the principal proponents of income tax cuts in both houses of Congress, to discuss the matter, but the President had not yet disclosed what transpired in the meeting.
Valte made the explanation after six of the biggest labor groups and alliances in the Philippines said they are united in demanding a reduction in the taxes withheld from workers.
Alan Tanjusay, spokesperson of the Trade Union Congress of the Philippines and Nagkaisa, said the two labor alliances together with the newly-formed Labor Party of the Philippines supports the congressional initiatives to lower income taxes.
Tanjusay, who is also the chairman of LPP, said that TUCP, Nagkaisa, and LPP are thinking of different forms of struggle to convince Aquino on the correctness and positive effect on the economy should the workers’ tax cuts be approved.
Wilson Fortaleza, spokesman of Partido Manggagawa, also reiterated that workers with a living wage less than P1,500 per day must be exempted from paying a withholding tax.
He said tax exemptions on the biggest number of workers, both in the private and government sectors, have been a long-time agenda of PM.
Fortaleza added that the utmost concern of PM is to increase the living wage of the Filipino working class, saying it is an important issue that his group will bring up in the House of Representatives not only today but also in the future.
Sonny Matula, president of the Federation of Free Workers, pointed out that reduced withholding taxes for the salaried workers not only brings a good effect on the workers but more so in the country’s economy.
Matula, who is also a lawyer, said the tax cuts on the annual income of the salaried workers are definitely beneficial to the economy because more workers could buy more products.
Bukluran ng Manggagawang Pilipino president Leody de Guzman questioned why Aquino rejected the idea of tax reduction when in fact it “would not cause a big loss in the tax base for the Bureau of Internal Revenue, since the increase in take-home pay will spur consumption and increase the collections for the value-added tax.”
De Guzman could not hide his disgust with the Aquino administration because it could “afford to give billions in tax breaks and incentives to foreign multinational monopolies … [but] it has the gall to complain of the P30 billion that would be reduced from the nation’s coffers due to the [tax reduction on withholding taxes].”
Even International Monetary Fund resident Representatives to the Philippines Shanaka Jayanath Peiris said that he supported the proposed lowering the the income tax rate in consonance with an expansion of the country’s tax-base.
“So a comprehensive approach would seem the best way to go and we would support very much a comprehensive reform. But the question is in the details because we want it to be at least revenue enhancing,” Peiris said at the sideline of the Asia-Pacific Economic Cooperation (APEC) meetings in Cebu.
“There are lots of exemptions and the rates are quite high so we could have much more broadening of the tax base while lowering the rates because otherwise you are taking a big risk with the revenue,” he warned.
Aside from IMF, some 18 business groups also called on the President to reconsider his position and heed the voice of various sectors appealing for income tax reform.