Lower income taxes possible without more VAT, excise on fuel and autos -solon


A militant solon urged the quick passage of the lowered income taxes without the VAT expansion and new excise taxes on fuel, saying that efficiency in collection and administration, not new taxes, are necessary to recover foregone revenues.

“Our people have long been charged with excessive income taxes due to government’s failure to reform the income tax system, so it is only a matter of justice that we approve the proposal as soon as possible,” said ACT Teachers Rep. Antonio Tinio during the House Ways and Means Committee at its hearing on tax reform bills Monday. “But we have to scrap the three regressive taxes it is proposed with.”

Part of the tax package proposal of the Department of Finance (DOF) are new excise taxes on petroleum products, value-added tax (VAT) coverage on certain goods and services currently exempt, and excise taxes on automobiles, allegedly to recover the P130 billion that will be foregone from lower income taxes.

“The DOF plans to collect more than P230 billion from expanded VAT and the excise taxes on oil and vehicles,” explained Tinio. “This means that recovering lost revenues is not the sole aim of government—it also aims to collect an even greater amount. Our concern now: it is the people who will pay for these extra billions on top of the P130 billion sought to be recovered.”

Tinio said that since the proposed new excise taxes and expanded VAT are regressive and indirect taxes, it is ultimately minimum wage earners and the poor who will shoulder the additional burden.

The solon urged the DOF and tax collection agencies to instead plug leakages and arrest official corruption by carrying out agency-level reforms. “We have always maintained that instead of imposing new taxes which will burden the people, government should fix its collection problems first.”

Tinio said that collection of additional revenues through increased collection efficiency is possible. According to the DOF, the Bureau of Internal Revenue (BIR), Bureau of Customs (BOC), and other tax agencies were able to collect more than P300 billion in just a few years, cutting by half their uncollected revenues.

“This proves that government can realize revenue in the billions without burdening the people with more taxes,” said Tinio. “New excise taxes and broader VAT on products and services used by the people are not necessary and should therefore be junked.” ###