Tax cut pressed
Congressmen push reduction over PNoy’s protests
LAWMAKERS pressed for a reduction in personal and corporate income taxes Tuesday, despite President Benigno Aquino III’s rejection of bills calling for such changes.
Marikina Rep. Miro Quimbo, an administration ally and chairman of the House committee on ways and means, said it was unacceptable that the income tax rates go unchanged.
“Despite the President’s position, we will not stop studying this measure because we feel this will work to the advantage and interest of our workers,” said Quimbo, who proposed the lowering of the rates.
“We really need to sit down [with officials from the Executive department] and see what are the points of agreement and what are the points of disagreement,” he added.
The leader of the independent minority bloc in the House, Leyte Rep. Ferdinand Martin Romualdez said Congress needs to pass the bill over the President’s objections.
“Let’s not stop finding ways to help the workers and show some compassion for them,” Romualdez said, using the Filipino term malasakit.
The Palace earlier rejected the bill to lower tax rates after Finance Secretary Cesar Purisima and Internal Revenue Commissioner Kim Henares estimated that such a move would mean P30 billion in lost government revenues in the first year of its implementation.
The President said he was unconvinced that lowering income taxes would benefit the majority of Filipinos.
The country’s largest labor group, the Trade Union Congress of the Philippines, blasted the President for rejecting the bills outright.
“He has not provided any relief for workers who helped build a competitive economy under his administration,” said TUCP-Nagkaisa spokesman Alan Tanjusay. “If this is the legacy that he intends Filipino workers remembers him by, so be it.”
In the Senate, another administration ally Senator Juan Edgardo Angara said he would continue to seek support for a lowering of tax rates.
“I am an optimist... I think that even those who are skeptical will come around and join our cause,” said Angara, chairman of the Senate ways and means committee.
“Let us continue to convince them. If we believe that we are right, why are we going to stop? We will be resolute in our advocacy but respectful,” he said.
Angara said he believed the President has not been given the complete picture on the proposed tax reform bills in the House and the Senate.
“I fear he was not given the right information by his economic managers,” the senator said.
During Tuesday’s budget deliberations in the Senate, Angara questioned the P50.34 billion budget proposal for the Finance Department that includes “budgetary support” for Land Bank of the Philippines and the Development Bank of the Philippines.
“I’m definitely not in favor [of that]. That’s not so urgent. The increase in pay through a lowering of income taxes is more urgent,” Angara said.
He also questioned the allocation of P3.2 billion for the construction of new buildings for the Bureau of Internal Revenue.
“It’s disgraceful. You are depriving people who don’t earn a lot yet, we’re spending the government’s money like it’s our own personal money,” he said.
Angara is the author of the Senate version of a bill that would lower tax rates, especially for low- and middle-income earners.
In Iloilo City Monday, President Aquino rebuffed moves in the Senate and the House to cut tax rates, saying this would downgrade the country’s investment rating.
Angara said the administration should come up with a counter-proposal so they could find “some middle ground.”
He expressed a readiness to push back the effectivity date of his bill.
Angara said if the projected revenue loss was what was holding the government back from endorsing the tax cuts, then Congress could pinpoint “non-urgent expenditures that can be cut.”
Angara said if projected revenue loss is what is holding back the government from endorsing the tax cuts, “then we can pinpoint non-urgent expenditure areas which can be cut.”
“We cannot use more or new taxes to cover up for tax cuts. We can also reduce spending. We can attack that concern from the expenditure side. So the deal can be like this: We cut taxes by one billion. But we can cut expenses or fat in the budget by the same amount,” Angara said.
“The justification we’ve been hearing is that we need taxes to fund the budget. So if we do away with unnecessary expenditures, will you now be amenable to tax cuts?” Angara said.
The Philippines has the second highest individual income tax rate in the region at 32 percent, next to Thailand and Vietnam, which impose a rate of 35 percent.
Vice President Jejomar Binay on Tuesday expressed his support for lowering tax rates.
“Our tax system must be seen as fair—meaning, those with fat pay checks pay higher taxes than those whose pay checks are less—and inflation-adjusted tax brackets, even if they will result in a short-term reduction of tax revenues, are only just,” Binay said at the Pandesal Media Forum in Quezon City.
The Vice President noted that according to the Management Association of the Philippines, those who earn P500,000 yearly pay 32-percent income tax, the highest in Asia.
He also lamented that despite 17 proposals to lower tax rates, none are expected to pass in Congress.
“If we don’t move to amend our tax system, there will come a day when the tax rate of teachers, policemen, soldiers and nurses are just as high as those of the millionaires,” he said.
Binay also pushed for a reduction in the corporate income tax rate to entice foreign investors to conduct their business in the country.
“We also aim to gradually reduce the current corporate income tax rate from 30 percent to a realistic and reasonable rate consistent with our Asean peers,” he said.
“We believe that lower corporate income tax will eventually draw more foreign investments, resulting in more jobs and revenues for the government,” he added.
Also on Tuesday, Internal Revenue Commissioner Kim Henares said the collection target of P2.025 trillion for 2016 was “too ambitious.”
“I don’t think we can reach that goal,” she said during budget deliberations in the Senate.
In the proposed 2016 General Appropriations Act, the BIR’s budget was raised 41 percent from this year’s P7.99 billion. Henares told the Senate the additional budget for her agency would be used to build new offices to cut the cost of paying rent.
Of the P2.543-trillion revenue target set for 2016, P2.025 trillion was expected to be collected by the BIR and the remaining is supposed to come from the Bureau of Customs.
In the latest Cash Operations Report released by the Finance Department, the BIR missed its target for the month of July, collecting P118.2 billion or 19.21 percent short of the P146.3-billion goal. With Vito Barcelo and Gabrielle Marie Consuelo H. Binaday