Bohol businesses have high hopes for tax reforms
TAGBILARAN CITY – The business sector in Bohol has high hopes the proposed overhaul of the country’s tax system will lead to a more equitable taxation.
Bohol Chamber of Commerce and Industry (BCCI) President Albert Uy said the simplified, efficient and transparent tax system will bring progress to the provinces.
Uy lauded the proposed tax reform’s intention to increase allocation for infrastructure and social services.
He also noted the role of the government in providing connectivity and electricity and other infrastructures that will help businesses withstand natural disasters.
What the business sector looks forward to is transparency, “where the funding will come from with the hope that this will not greatly impact our pockets”.
Uy also relayed concerns on the “impact of the increase in excise tax on fuel to power, transportation, and the manufacturing sector that might translate to higher prices in commodities and services”.
He also worried that the removal of zero VAT rating from indirect exporters might affect the competitiveness of exporters that source their materials from indirect exporters.
“With the thriving number of micro, small, and medium enterprises (MSMEs), we are excited to hear of the reforms proposed to be introduced,” Uy said.
Albay 2nd District Rep. Joey Salceda and Department of Finance Asistant Secretary Paola Alvarez brought the second roadshow to Bohol last Friday to solicit support for the two complementing tax reform bills in the House of Representatives.
The Tax Reform for Acceleration and Inclusion (TRAIN) (House Bill 4774) is being pushed by Quirino Rep. Dakila Cua.
Under the proposed law, cooperatives below the threshold and raw agricultural products will continue to be VAT-exempt.
The Tax Administration Reform Act (TARA) (HB 4888) filed by Salceda complements TRAIN.
Yap earlier filed House Bill 36 that seeks “to lower corporate tax rates imposed on corporations to remove the incentive for corporate taxpayers to resort to tax evasion and encourage them to voluntarily pay their tax liabilities, and to compete in funneling investors upon the ASEAN regional economic integration as well”.
The DoF captioned the roadshow TARA na sa TRAIN: Deepening Understanding of the Tax Reform Measures (HB 4774 and HB 4888).
The TRAIN bill will address problems in the tax system or tax policy itself and the TARA bill will address inefficiencies in administration and implementation.
The two measures are set for approval on first reading on Monday.
The fight against poverty has now moved on to become the fight against iniquity in taxation, according to Salceda.
Salceda came with Alvarez- -the daughter of House Speaker Pantaleon Alvarez, BIR Director Alfredo Misajon, Giselo Galido of the Bureau of Customs, and USAID-FPI Outreach Specialist Relly Fajardo to explain the impact of the proposed tax reform measures.
Third District Rep. Arthur Yap, First District Rep. Rene Relampagos, and Provincial Administrator Ae Damalerio joined them in the forum with members of the Philippine Chamber of Commerce and Industry led by PCCI former regional governor Norris Oculam and BCCI members led by Uy.
Alvarez explained that under TRAIN that contains the Package 1 of the administration’s tax reform program, the VAT threshold for marginal establishments can be raised from P1.9 million to around P3 million, effectively exempting their goods from VAT.
Alvarez explained that in the current system, P10,000 is the minimum threshold for taxation.
“Now, we want to raise it to P250,000. So those earning P250,000 a year will then be tax exempt. So, the 13th month pay and bonuses of those earning P250,000 and below will be tax exempt. At present, if you are earning P500,000 a year, you are already taxed at 32 percent. With the proposed new tax system, that will be lowered to 20 percent and in the long run, lower it to 15 percent. By lowering the tax rate for the low-income earners, and increasing the higher income-earners, it would be more equitable since it will mean more take-home pay for wage earners,” Alvarez explained.
The estate taxes will also be lowered to 6 percent which will unlock more lands for investments
Alvarez cited some situations where some estates that had been transferred to the heirs by succession, but the heirs failed to pay taxes because of the high tax rate.
She also cited that the Philippines has 59 lines of exemptions from the tax code, 84 exemptions from special laws. Indonesia only has 37 exemptions, while Thailand, Vietnam and Malaysia have even less exemptions.
Salceda cited that the “Philippines has struggled with a huge budget deficit since 1997, where deficits were often larger than two percent of GDP and reached up to a high of five percent in 2002.” (PNA)