Want tax reform? Override PNoy, stop Roxas

ONLY in the Philippines could we find a government militantly refusing, rejecting and maligning tax reform bills -- well, quite specifically, only the Aquino administration and his anointed one Mar Roxas hold such distinction.

Bayan Muna Reps. Neri Colmenares and Carlos Zarate are pushing House Bill 5401 seeking to amend the National Internal Revenue Code of the Philippines.

Why? This 1997 law classifies taxpayers under ten income brackets, with the top tax base set at P500,000.

“Since 1986, however, these tax bases remain substantially unchanged. Meanwhile, based on the 1986 to 2014 Consumer Price Index published by the NSO, national consumer prices have increased by 539.53% since 1986. Thus, the P500,000 top tax base, if adjusted to its present value, is now equivalent to P2.697 million,” the two activist lawmakers said in the bill’s explanatory note.

The basis for taxpayer classification is now obviously outdated, making taxation an undeniable and oppressive burden to millions of people, especially the middle class and entrepreneurs.

For Colmenares, Makabayan lawmakers, and the organizations under the Bayan umbrella, tax rates should be fair and progressive.

The activists are not alone. In fact, HB 5401 is one of 17 tax reform measures that Aquino and Roxas refuse to consider. Yes, seventeen, and whose authors come from various parties, even from the ruling Liberal Party.

The activists and lawmakers are not alone. Former Budget and Management Sec. Benjamin Diokno writes: “No economist worth his soul would argue against the need for a comprehensive tax reform program for the Philippines. The new tax system should be broad-based, fair, efficient, high yielding, and competitive with its neighboring countries.”

The activists, lawmakers and economists are not alone. The Tax Management Association of the Philippines has come out openly for tax reform and lower taxes. It is joined by 21 groups: Pilipino Banana Growers and Exporters Association; Japanese Chamber of Commerce & Industry of the Philippines; American Chamber of Commerce of the Philippines; European Chamber of Commerce of the Philippines; Alliance of Workers in the Informal Economy/Sector; Foundation for Economic Freedom; Canadian Chamber of Commerce of the Philippines; Korean Chamber of Commerce of the Philippines; Philippine Association of Multinational Companies Regional Headquarters; Federation of Filipino-Chinese Chambers of Commerce and Industry; Management Association of the Philippines; Philippine Chamber of Commerce and Industry; Confederation for Unity, Recognition and Advancement of Government Employees; Australia-New Zealand Chamber of Commerce; Financial Executives Institute of the Philippines; Makati Business Club; IT and Business Process Association of the Philippines; Center for Strategic Reforms; Association of CPAs in Public Practice; Good Government Advocates and Practitioners of the Philippines; and the Association of CPAs in Commerce and Industry (ACPACI).

These 22 organizations point out what we already know but what President Aquino and Roxas wish to maintain: “The Philippines effectively imposes the highest personal income tax rate on the same taxable income of P500,000 (or its equivalent).”

Let me add: The Philippines’ Expanded VAT is also the highest VAT rate in the region.

Apparently responding to the Aquino-Roxas tag team’s false claims, the groups say: “Studies have shown that a reduction in

tax rates, together with the simplification of the tax system, will help spur tax compliance and, thus, broaden the tax base and improve tax effort.”

They added: “A reduction in the rates will also increase disposable income for domestic purchases of goods and services that will, in turn, increase the government’s tax take of consumption taxes.”

The Aquino-Roxas claim that lower revenues may affect public services is baloney.

Albay Gov. Joey Salceda answers this: “The Php30 billion projected losses from lowering personal income taxes is a big loss to government funds but there was an underspending of Php650 billion to offset the loss.”

Lest we forget: Remember DAP and other presidential pork barrel? Remember how Malacañang forces agencies to underspend so the President could control the underspent public funds in new pork barrel funds? The high taxes support this pork barrel-powered type of governance under Aquino -- which explains why he is against tax reform, and which also explains why Roxas is also against it because he wants the same pork perks if ever “pumuti ang uwak” and he wins as president.

International credit rating agencies also press Aquino to stand against tax reform. A big chunk of proceeds from high taxes go to paying government obligations. These agencies and the Big Banks and Big Countries they serve don’t care whether we pay 35 or 50 percent personal income tax rates -- as long as incompetents like Aquino and Roxas are willing and ready to pay odious loans.

At the end of the day, regardless of these figures, the issue is about fairness and opportunity.

Should Henry Sy, Manny Pangilinan and Jaime Augusto Zobel de Ayala pay higher tax rates than their employees? Yes.

Should workers, employees, professionals and entrepreneurs take action to change this situation? Yes.

Should we fight Aquino and Roxas on the issue of tax reform? Yes.

Should we pass House Bill 5401 and remake the tax system? Yes.

There’s still time to pass tax reform and override a possible Aquino veto. There’s the task to reject and punish the pro-high taxes Roxas in the polls.

These may all depend on what the people of the Philippines would and could do.

Let’s isolate the Aquino-Roxas and win for the nation a fair and progressive tax system.