No new taxes during Noy’s last year in office
President Aquino apparently does not intend to ask the House of Representatives and the Senate to impose new taxes or increase existing rates during his last year in office.
Finance Secretary Cesar Purisima has told the House appropriations committee chaired by Davao City Rep. Isidro Ungab that the imposition of a new tax is not among the legislative proposals the administration wants Congress to approve.
He said the proposals are mostly reform measures that would help the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) improve their efficiency in collecting taxes.
He said the measures include withdrawing or rationalizing tax incentives that certain pioneering businesses enjoy and modernizing BIR and BOC collection systems through automation.
According to Marikina Rep. Miro Quimbo, who chairs the House ways and means committee, current tax incentives total about P70 billion a year.
Up to P40 billion of these could be withdrawn, which would translate to a revenue increase of an equal amount for the government, he said.
Quimbo is also proposing that the BIR train its guns on professionals like doctors, lawyers and accountants, and on self-employed individuals like entrepreneurs.
“Tax compliance by these groups of high net worth individuals ranges only from 31 percent to 40 percent. In contrast, tax compliance is 100 percent on the part of salaried workers because their employers withhold their income tax payments before releasing their salaries,” he said.
In the briefing he gave the Ungab committee, Purisima did not touch on proposals being finalized by Quimbo and his Senate counterpart, Sen. Juan Edgardo Angara, to reduce income tax rates for individual and corporate taxpayers.
The proposals would mean tens of billions in revenue losses for the government, which is why Quimbo and Angara are considering bills that could bring in more revenues, including one that would impose tax on soft drinks, energy drinks and similar beverages.
The Department of Finance and the BIR are strongly opposed to proposals that would reduce income tax rates, unless Quimbo and Angara could come up with bills that would offset projected losses.
In his State of the Nation Address last July 27, President Aquino took pride in doubling the amount of taxes collected by the administration of detained former President and Pampanga Rep. Gloria Macapagal-Arroyo.
“When we stepped in, the highest collection on record was in 2008, at P778.6 billion. We surpassed this by leaps and bounds. In 2012, the BIR collected P1.06 trillion – the first time in our history we have breached the one-trillion mark for collections. Last year, the number went up to P1.3 trillion; this 2015, we will collect up to P1.5 trillion,” he said.
“We only needed five years to match, surpass and almost double our predecessor’s record high – and we did this without imposing new taxes, as promised, apart from sin tax reform,” he said.
By sin tax reform, the President was referring to the law that restructured excise taxes on the so-called sin products like cigarettes and liquor.
Previous Congresses and administrations had sat for at least 15 years on bills that sought to increase sin taxes, giving tobacco and liquor companies a windfall.
The President thanked the present Congress for the enactment of the sin tax reform law.
He also gave credit to BIR Commissioner Kim Henares for the record tax collections.
National budget doubles
The national budget has nearly doubled under the administration of President Aquino.
Documents submitted by Malacañang to the House appropriations committee show that when Aquino took over from Arroyo in 2010, the national outlay amounted to P1.541 trillion.
It went up to P1.645 trillion in 2011, P1.816 trillion in 2012, P2.006 trillion in 2013, P2.265 trillion in 2014, and P2.606 trillion this year. For next year, the President is proposing P3.002 trillion.
Aquino is seeking the biggest budgetary increase of almost P400 billion for 2016.
The administration expects to collect P2.543 trillion in tax revenues, of which more than P2 trillion is to be raised by the Bureau of Internal Revenue (BIR).
Non-tax revenues like government fees are projected to amount to P151.4 billion, while P2 billion would be generated from the sale of more state assets.
In total, the government expects to collect nearly P2.7 trillion in revenues, leaving a budget deficit of P309 billion, which will be funded through borrowings.
The budget documents show that the deficit would be 10.3 percent of the total budget, compared to 20.7 percent in 2010.
In 2006, the share of debt payments out of the national outlay was 29.7 percent. Next year, it will only be 14 percent.
“P64 in every P100 will be spent on social and economic services that ensure no one is left behind in the country’s progress. This huge investment should help boost economic growth to 7-8 percent and bring down the number of poor to 18-20 percent of the population next year,” according to the documents.
The administration’s economic managers attribute part of the country’s economic growth to increased public spending.
The Bangko Sentral ng Pilipinas has reported that the nation achieved its largest economic expansion under President Aquino.
The highest growth rate of 7.6 percent was recorded in 2010 during Aquino’s first six months in office and Arroyo’s last six months.
The largest full-year growth of 7.1 percent under the present administration was attained in 2013, before it fell to 6.1 percent in 2014 and 5.2 percent during the first quarter of this year.