Opinion on Tax Reform Bills

Philippine Taxation Law was set almost three decades ago in 1987.  Taxation being the primary source of the government’s revenues, there are three legislators who looked closely on it especially personal taxes - sees a need for Reform. The latest among is Senator Angara’s which had been the topic of discussions in the country today. The President and the BIR Commissioner were not in favor of the TAX CUT Angara has suggested. Comparing the Bills filed here is what I am seeing about it, being an ordinary citizen.

A Glimpse on Tax Reform Bills

SB 2149 2014 authored by Senator Juan Edgardo “ Sonny” Angara  

Angara supports the need for Tax Cut, he also explained that the expected shortage on collections for the Government’s Budge can be settled from other income sources. Angara advocated that the Government can collect twice as much from the revenues sourcing from the Bureau of Customs (BOC) and the Bureau of 

Internal Revenues plus the premiums obtained from Public and Private Partnerships(PPP) undertakings.  And the two Bureaus mentioned above can generate an income of around  1-1.5 T and IF the bill is approved,  ONLY 30 B from it shall be cut from the government’s income

His advocacy lies on the empowerment of Human Capital thru reduced levy so that our own would not think of migrating to neighboring countries where taxes are quite feasible to them since we are on the verge of economic integration with the Association of South East Asian Nations (ASEAN) community. More likely that job opportunities abroad will attract  our income tax payers to leave the country burdened by the taxes billed on them.

Sin Taxes (taxes on cigarettes and beer) can also be jacked-up (also to help people preserve their health) . A good example is greater taxes for three to four times car owners when buying their next luxury car – this has a domino effect on the economy affecting traffic conditions if they will be allowed leniently. Those are some of the options that will also provide  advantage to the economy and the citizens.

SB 1942 2013 authored by Senator  Paolo  Benigno “Bam” Aquino IV

Sen. Aquino suggested tax rate adjustment on a six-year interval according to Consumer Price Index (CPI) and  a tax exemption for earners of 60,000 below. Quite helpful for low-wage earnersJ

SB 716 filed 2013 filed by Senator Ralph Recto

The threshold shall be matched or adjusted with the prevailing Consumer Price Index (CPI) – that would probably explain the need for HIGHER adjustment on set taxing brackets as he said the prices of consumer commodities has almost doubled from 1998 to 2013. He has also cleared that earners in the 20,000 below range shall only be charged the lowest rate of 5%. The bill also suggests that rates be adjusted every six years interval based on CPI.

Why Pro-Tax Reform?

The salary of a fastfood service crew today can be somehow compared to the salary of the Store Managers way back in 1987 when the Taxation Law has been put on practice. I believe that his suggestion on adjustment basis is fairly acceptable for us and to our economy. I salute the Sen Recto for not just favoring what could possibly please the public alone but he is balancing his suggestions with respect to the economic situation.

Somehow, Sen. Angara’s Bill (the latest suggestion) is somewhat favorable to earners of various income brackets –lowering taxes may benefit our economy by keeping the highest government revenue source, the workers happy (income tax) within our country.

Senator Aquino’s suggestion will be very helpful to the lowest bracket of wage-earners for the exemption he envisions.

Why NO to Tax Cut?

In an interview conducted by Mr. Erwin Tulfo to Ms. Kim Henares in “Punto Asintado”, Ms. Henares blatantly disapprove of TAX CUT unless the legislators could also make another bill to absorb the projected deficiency of about 200 B from their collections minus the suggested tax drop.  Those are expected from them by the Finance Department for the country’s budget allocation come 2016.

I can see Ms. Henares point talking about the value of Philippine peso when the Law on Taxes are implemented not just about her tending to side with the President being a cabinet appointee. The tax rate is the same but the purchasing power of the peso devaluated. A common example is the price of a liter of softdrink before around PhP 10.00 is now valued more than a hundred percent increase of its price. The cost of materials for infrastructures and projects funded by the government for the nation is not immune of the price hike yet the levy remains the same as of 1987, unquestionably outdated. The CUT would mean a lot.

I may agree with Ms. Henares point on having a buffer to absorb the loss once Angara’s Bill becomes a Law.   They must also suggest some collection source to compensate for the budget deficit it may cause. Henares is requesting on lifting the Bank Secrecy Law for BIR to collect more after catching tax cheaters or evaders. Not just capturing them but also it will serve as a reminder for everyone to pay APPROPRIATE taxes knowing and afraid they might soon be discovered tampering income that can somehow be traced thru bank accounts; that way she would favor the Bill, Henares said. It is easier to lessen taxes but it needs to move mountain to return or increase taxes again once the need arise that is what the BIR Commissioner is concerned of. I am not so sure if President Aquino shared the same reasons.

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However, the IMPACT of revenues from Income Taxes and Value Added Tax (income from sales) well-collected BUT mismanaged or subject to corruption may not be felt by our countrymen. I do hope that the projects where our taxes go shall be free (am I expecting too much and impossible?!) from anomalous deals.

I just hope the roads, bridges, government structures erected from the taxes we pay shall NOT be made from sub-standard materials that is presumably back on the list of “Things to Accomplish” again by the local or National Government again. I do hope that the taxes we paid from our meager income will not be donated to bogus cooperatives and non-government agencies camouflaged to corruption like what has happened to development Assistance Fund (DAF) made possible by Napoles and her cronies. I hope that the taxes we have paid for shall not be wasted for buying defective and outdated fighting equipment for our national guards-the army and the police force. I just hope that the Pantawid Pamilyanng Pilipino Program (4Ps) beneficiaries are the rightful needy not just a anybody who wants it and has power and connection to be listed…

Everything boils down to management and the conscience of those who are running the economy and those who have direct access to the coffers. But we can not hope for what we had hoped if we never keep on trying. Let us learn to TRUST the authorities, and the AUTHORITIES may always be responsible and God-fearing persons so that everything comes next – honesty and integrity.