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Solons slam House approval of anti-poor tax bill

31 May 2017 No Comment

ACT Teachers Rep. Antonio L. Tinio and Rep. France L. Castro condemned the passage on third reading of the Duterte administration’s tax reform bill, saying that the new excise taxes on petrol and expanded value-added tax (VAT) will hit low-income earners and poor families.

House Bill 5636, dubbed the Tax Reform for Acceleration and Inclusion (TRAIN), will tax kerosene, diesel, LPG, and bunker fuel oil, which currently are zero-excise, at P3.00 per liter by January 2018, and P6.00 per liter by 2020. The existing rates on other petrol products like leaded and unleaded gas will also be increased.

The bill will also subject to VAT certain businesses and transactions relating to power, water, and transportation, among others, which are currently exempt.

With other Representatives from the Makabayan bloc of progressive people’s party-lists, Tinio and Castro voted against the bill on the last session day of Congress before it adjourned sine die.

Citing DOF data, the militant solons said that excise taxes on petrol products will increase overall inflation rate by 1.5 percentage points, nearly doubling inflation from its current rate to 3.3%. Food prices in 2018 will increase by up to 1.6%, while fares will go up to 4.9% and power rates to 1.1%.

The DOF data also revealed that the combined effect of oil excise and VAT expansion will reduce the monthly take-home pay of subsistence poor (Decile 2) households by up to P1,400. Middle class (Decile 10) and minimum-wage (Decile 7) households will have greater take-home pay due to lower income taxes but inflation will cost them around P4,316 and P1,667, respectively.

“Contrary to allegations of the Duterte administration, the burden of oil excise and broader VAT will not be borne by the rich. What the Lower House approved today are regressive taxes that will slam into the poor in the form of higher prices of basic commodities and services,” Tinio said. “Fixed-income earners may at least have relief due to lower income taxes, but what about minimum wage earners, those in the informal sector and without source of income? They will have no benefit at all from this bill.”

“The Duterte administration aggressively pushed for the bill knowing full well that this TRAIN will run over all Filipinos, and most especially the poor,” said Castro. “New excise taxes will be slapped into products and services daily used by the people on top of the existing VAT, making life harder for the Filipino masses.”

“We also denounce the bundling of income tax relief together with the passage of new and heavier taxes. Instead of fully answering the just demand for tax justice, the government will drive more of our people deeper into poverty, and widen the gap between the rich and the poor,” she added.

“The administration keeps repeating that these new taxes are needed for infrastructure. In reality, this is infrastructure intended export processing zones, giant mining companies, haciendas, agri-business ventures, and tourism, mainly foreign investors in them–not the people, especially the poor who will be squeezed dry with these new taxes,” ended Tinio. “In other words, these new taxes will be wrung out from the poor, to benefit mainly the rich.” ###

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