Angara calls for further committee hearings on tax reform

SEN. Juan Edgardo M. Angara said tax reform will undergo another round of deliberations by the chamber’s ways and means committee which he chairs, adding he expects a committee report out by September.

Mr. Angara’s new timeline for the legislation, which the government hopes to implement by 2018 or possibly earlier, comes after President Rodrigo R. Duterte urged the Senate in his State of the Nation Address on Monday to support the swift passage of tax reform measures, which are otherwise known as the Tax Reform for Acceleration and Inclusion Bill (TRAIN).

In his address, Mr. Duterte issued an apparent warning to Mr. Angara about his upcoming reelection campaign in 2019.

Mr. Angara said the government must ensure it is doing its best to minimize corruption or inefficiency from the revenue collection effort alongside the imposition of new taxes.

“Our objective is not only to impose new reforms or new ways of taxation but also reforms in the administration to curb corruption.... We are looking at how technology could be used in collecting taxes. That’s why interconnectivity is very important,” he said after the committee hearing, speaking in Filipino.

Sen. Loren B. Legarda said during the hearing that her issue with the tax system is the delayed release of Value-Added Tax ( VAT) refunds, which some resource persons claimed takes as long as five years.

Ms. Legarda asked the Commissioner of the Bureau of Internal Revenue (BIR), Caesar R. Dulay if VAT Tax refunds can be issued faster. Mr. Dulay said the bureau has a 120-day rule for processing complete refund applications. The processing of VAT refund cases only takes much longer, he said, when the case is rejected and filed with the Court of Tax Appeals.

Mr. Dulay added that part of the problem is a staff ing shortage at the BIR.

“My mandate is to collect taxes. Part of that would be 492 cases pending in the Department of Justice (DoJ)… We hope, as requested by the President, the DoJ they will pass it as proposed by the secretary of Finance and the economic team,” the commissioner said, speaking to reporters after the hearing.

Tax administration measures proposed under TRAIN include fuel marking and monitoring to curb oil smuggling, the issuance of electronic receipts for transactions above P25, interconnection with the BIR of large and medium firms’ cash registers/point-of-sale machines for real-time reporting of sales data, GPS- enabled locks for transporting cargo from ports to economic zones and free ports, and relaxation of bank secrecy laws for fraud cases.

Resource persons said the measures will be costly.

A representative for Cebuana Lhuillier, the chain of pawnshops, cited the difficulty of complying, noting that the proposal is “easier said than done.”

Senator Legarda, on the other hand, took up the issue of VAT refund because according to the private sector representatives it takes up to five years before it can be obtained.

According to Atty. Dulay, who talked to the media after the hearing, as of now one of the problems facing the bureau is the lack of manpower.

TRAIN hurdled the House of Representatives in June.

The Senate committee hearings next week will focus on the excise tax on automobiles.

“By September we will come up with a committee report… we will try our best to come up with something that is both fair to the government and tax payers,” Mr. Angara said. —