Manila Bulletin

De­bate on in­come tax cut & ‘buwis-pawis’

- By FRED LOBO Tax Credit · Finance · Taxes · Income Tax · Elections · Business · Jejomar C. Binay · Philippines · Asia · Juan Edgardo Angara · Quezon City · ASEAN · Romero Quimbo

ANA­TIONAL de­bate is de­vel­op­ing on pro­pos­als to lower in­come tax rates, pri­mar­ily for work­ers and low-in­come earn­ers in the coun­try.

Let con­cerned of­fi­cials and groups tackle the is­sue for the ben­e­fit of taxpayers and the coun­try as a whole.

*** Pres­i­dent Aquino III thumbs down pro­pos­als to lower the coun­try’s in­come tax rates, and sub­se­quently in­crease the 12 per­cent Value-Added Tax (VAT).

Be­ware of their ad­verse im­pact on the econ­omy and the peo­ple, says P Noy.

*** But Vice Pres­i­dent Je­jo­mar Bi­nay, a de­clared op­po­si­tion pres­i­den­tial can­di­date, says low­er­ing in­come tax for or­di­nary or com­mon work­ers is the “just” thing to do.

The Philip­pines’ in­di­vi­ual in­come tax rates, reach­ing 32 per­cent for in­come ex­ceed­ing 500,000, are among the high­est in Asia, he says.

*** Pres­i­dent Aquino points out that his gov­ern­ment has al­ready com­mit­ted not to im­pose new or higher taxes un­der his watch.

“I’m not con­vinced” that the pro­posed tax ad­just­ments would ben­e­fit the peo­ple in the long run, he says.

*** The Pres­i­dent ex­plains that re­duc­ing in­come taxes may ini­tially sound good since it will in­crease a per­son’s dis­pos­able in­come.

But it will af­fect the coun­try’s fis­cal health and credit rat­ing, P Noy warns.

*** “The ques­tion is if we re­duce the in­come tax, our rev­enues will de­crease and our deficit will grow. The bal­loon­ing of the deficit will be a neg­a­tive fac­tor when credit rat­ing agen­cies rate our coun­try,” Aquino says.

What’s good for in­come tax pay­ers won’t be good for the coun­try, he claims.

*** “In ex­change for low­er­ing in­come taxes, there is a pro­posal to in­crease VAT and in­crease the levy on oil prod­ucts. So when we in­crease the taxes on oil prod­ucts, all other con­sumer prices might in­crease as well due to higher trans­porta­tion and elec­tric­ity rates,” Aquino adds.

“So I am not con­vinced at this time,” on tax ad­jus ments, Aquino says.

*** The Pres­i­dent cites that, in fair­ness, he did not raise taxes since he as­sumed of­fice in 2010, ex­cept on sin prod­ucts such as al­co­hol and cigar­rettes which brought much- needed rev­enue.

“To­day, we have man­aged our deficit... we were given an in­vest­ment grade sta­tus by rat­ing agen­cies,” he ex­plains.

*** Some law­mak­ers, pri­mar­ily Sen. Sonny An­gara, Rep. Miro Quimbo, and mem­bers of the Mak­abayan Bloc, in­sist that in­come tax rates be low­ered to al­le­vi­ate the plight of the poor.

Less tax de­duc­tion and more pur­chas­ing power for the peo­ple, they urge.

*** Vice Pres. Bi­nay agrees to the low­er­ing of in­come tax rates for com­mon work­ers, in a state­ment be­fore the Pan­desal Media Fo­rum in Que­zon City.

“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 it will re­sult in short-term re­duc­tion of tax rev­enues, is only just,” he ar­gues.

*** Bi­nay says he agrees with the Man­age­ment As­so­ci­a­tion of the Philip­pines that the coun­try’s 32 per­cent in­come tax is among the high­est in Asia.

Lower taxes for com­mon work­ers like teach­ers, po­lice, sol­diers and nurses, he sug­gests.

*** “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,” Bi­nay adds.

“More tax re­forms,” prom­ises the Vice Pres­i­dent and “pres­i­den­tiable.”

***

Other pres­i­den­tial can­di­dates and politi­cians are ex­pected to join soon in the rag­ing tax de­bate.

Tax­a­tion will likely emerge as a ma­jor 2016 elec­tion is­sue.

*** Time to hear more com­ments and gems of wis­dom on tax cuts and re­forms from var­i­ous sec­tors.Time for a lively and in­tel­li­gent de­bate on “buwis-pawis.”

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