While we at the Freedom from Debt Coalition (FDC) welcome President Aquino III’s stand against increasing the regressive Value-Added Tax, we are appalled at his reasoning against income tax cuts. He could have grabbed the opportunity to review and reduce the unjust tax burden on ordinary Filipinos, particularly the fixed-income earners, but his line of thinking immediately jumps to calculating possible revenue deficits and how this would affect the country’s credit ratings.

Aquino III does not even bother to look at existing tax rates and tax brackets that have become passé considering today’s higher cost of living compared to 1997 when the rates and brackets were last determined. He is worried over the P30 billion lost revenue if income taxes are lowered but he is at ease with billions of pesos of forgone revenues due to fiscal incentives given to private investors. Worse, he remains resolute with losing billions of pesos of taxpayers’ money to service debts that are challenged as fraudulent, useless and/or wasteful.

For 2015 alone, out of the P372.9 billion appropriation for interest payments, P187.21 million will be paid for loans spent for the Tullahan (Sixth) Road Project, the Power Sector Development Program, the Pampanga Development Flood Control, the Bohol Irrigation Phase II and the Angat Water Supply Optimization. Another USD 28.353 million will go to principal amortization of these same projects. And these are just five questionable projects; more could have been revealed had Aquino III and his allies, like Budget Secretary Butch Abad, did not block FDC’s moves for Congress to conduct an Official Audit of all Philippine debts.

What compounds the problem with payments for illegitimate debts is that they do not undergo scrutiny of Congress because the law provision on automatic appropriations for debt service remains in place and continues to undermine the people’s power of the purse.

As for fiscal incentives, data from the Department of Finance shows that the government loses P37 billion annually in forgone revenues due to income tax holidays granted to investors by the Board of Investments and the Philippine Economic Zone Authority. A World Bank study even states that perks for investors amount to 1% of the country’s GDP, which translate to about P126 billion in lost revenues for 2014 alone. Whether the entry of these investors resulted in improved access to efficient services for Filipinos is another contentious area given the skyrocketing rates, forcible consumers’ absorption of corporate taxes and problematic operations in the power, water and transportation sectors.

Aquino III’s outright rejection of a tax measure that would benefit millions of ordinary Filipinos is another display of this administration’s shortsightedness and misplaced priorities. He does not think twice about continuing to wring a substantial portion from hard-earned salaries of taxpayers who can hardly make ends meet, as long as monies flow into public coffers.

But come to think of it, such reasoning is reminiscent of how and why Aquino III and Abad hatched the unconstitutional Disbursement Acceleration Program (DAP). It does not matter whether DAP violates laws on the budget process and whether it undermines transparency and the people’s power of the purse, as long as the Aquino III administration gets to do what it wants with public coffers. The end justifies the means even at the expense of fiscal and tax justice for millions of hapless Filipinos.

 

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