ASEAN KEY DESTINATIONS
Quimbo: Projected P43-B revenue loss if tax rates adjusted just a BIR ‘scare tactic’
PHILIPPINES: The government’s revenues will increase anywhere between P6 billion to P35 billion if Congress passes a measure lowering income tax rates, contrary to the Bureau of Internal Revenue’s (BIR) claim that public coffers will be drained drastically, a House leader said Sunday.
Deputy Majority Leader and Marikina City Rep. Romero Federico “Miro” Quimbo said BIR Commissioner Kim Henares’ pronouncement that the government will lose P43 billion in revenues if a tax reform bill is passed is “merely a scare tactic,” since a simplified tax system will help improve revenue collections as the base becomes broader.
“With a 70- to 75-percent increased compliance from the self-employed alone, the government is poised to earn additional P6 billion in revenue. With a 90-percent compliance, the government will earn as much as P35 billion in additional revenues. Not only will we correct a long-existing inequitable structure, we will also provide the government more revenues to finance programs geared toward inclusive growth,” he said in a statement.
Aside from the loss of government revenue, Henares has warned that country’s credit rating may be negatively affected if income tax collection dwindles.
The House Ways and Means committee chaired by Quimbo is deliberating on at least nine bills seeking to bring down income tax rates by as much as 15 percent. The Philippines has the highest income tax rate among Southeast Asian countries at 32 percent.
Not 100 percent
Quimbo said the government is only poised to forego P23.6 billion, or almost half of the amount Henares claimed, if a tax reform measure is passed.
The loss, however, may be offset through value-added tax and corporate income tax as soon when workers spend their bigger take-home pay, the lawmaker noted.
Plugging the loopholes in other revenue sources such as excise taxes on mining and alcohol as well as fiscal incentives will also help bolster BIR’s tax collection.
The Department of Finance has urged lawmakers to work on the passage of measures that will help compensate for the BIR’s projected losses in income tax collection if the proposed adjustment of income tax brackets becomes a law.
Quimbo said Henares can’t claim that the government’s revenues will dip significantly once income tax rates are lowered since the BIR’s tax collection has yet to reach 100 percent.
“BIR has not yet achieved a perfect collection efficiency so they cannot claim the revenue loss will be so huge. They have yet to exhaust all sources of revenue. Even just for the self-employed professionals and non-professionals – they only currently collect taxes from 51 percent of professionals and only 29 percent of non-professionals," he said.
Leaders of the House of Representatives and Senate last week agreed to prioritize the passage of a comprehensive tax reform bill after including it in the list of priority measures it intends to pass as soon as possible. Congress is eyeing the passage of the law reducing income tax rates by next year, Quimbo said. — BM, GMA News
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