No double taxation in draft federal charter

The Consultative Committee (Con-Com) tasked to review the 1987 Constitution rejected claims that shifting to a federal system of government will promote double taxation.

During the hearing of the Senate Committee on Constitutional Amendments and Revision of Codes, chaired by Senator Francis Pangilinan, Conrado Generoso, spokesperson for the Con-Com said the draft federal charter itself bars double taxation calling media reports that double taxation would be imperative under a federal set up false.

Under the proposed federal charter, Generoso said the Con-Com has provided the federal government power to levy and collect all taxes, duties, fees, charges and other impositions except those that are granted to the federated regions.

The Con-Com also gave the federal government and federated regions authority to ensure that taxation shall be uniform, equitable and progressive.

“So those fears that there will be runaway taxation by the federated regions are grossly misplaced. Also it is explicitly provided for in Section 3, Art. XIII, that no double taxation shall be allowed,” Generoso said.

“So those stories that are coming out in the media for the past few days about double taxation is absolutely false because it is so provided in the draft that no double taxation shall be allowed,” he stressed.

Under the draft Constitution, the federated regions:

• have the power to collect donor’s, documentary, estate taxes, real property tax, professional tax, franchise tax, games and amusement tax, environmental, pollution and similar taxes, road users tax, vehicle registration fee, transport franchise fees, local taxes and other taxes which may be granted by Federal Law;

• shall be given a share of not less than 50 percent of all revenue from income taxes, excise taxes, value added tax, and customs duties. Regions in need shall be given a share from the Equalization Fund which shall not be less than three percent of the annual General Appropriations Act (GAA); and

• shall be entitled to 50 percent of all net revenues derived from the exploration, development, utilization of all natural resources within their territory and other financial assistance that Congress may provide by law.

Former Chief Justice Hilario Davide earlier sounded the alarm over the possibility that the proposed shift to a federal of government would eventually be “anti-poor” as it would burden Filipinos with double taxation.

Davide pointed out that the federal state might impose taxes that are different from those by the federal government.

“People will be tortured with various problems on the issue of taxation alone. Federalism is anti-poor,” the former Supreme Court chief had said.

Davide said the two taxes are unavoidable as this is needed to maintain the state and contribute to the central government.

“That is totally unavoidable. There will always be at least two kinds of taxes,” Davide was also quoted as saying in an earlier interview.