12 September 2016

MANILA, Philippines – While the Freedom from Debt Coalition (FDC) welcomes the Duterte administration’s move to reform the country’s outdated 19-year old tax scheme, it cautions against the regressive effects that the five tax policy packages as they could penalize ordinary wage-earning citizens.

“We urge Finance Secretary Carlos Dominguez to reveal to the public the details of the tax reform packages he presented to Congress so we would know how these measures will impact the lives of millions of Filipinos to whom every centavo counts in their daily struggle to make ends meet,” FDC Secretary-General Sammy Gamboa said in a news release Sunday.

Gamboa expressed concern that the reforms would be based on trade-offs and compromises with corporate interests rather than principles of equity, fairness and justice. 

“Any increase in workers’ take-home pay due to lower individual income tax would be hardly felt with higher prices of goods and services as a result of increases in excise tax on oil, which would hike fares in public transportation, and reduction of Value-Added Tax exemptions.” Gamboa said.

Earlier pronouncements of the Department of Finance (DOF) showed plans to cut tax rates on individual and corporate income, fiscal incentives to investments, property and capital income alongside increases in excise tax on oil, property valuation, and stocks traded in the stock market. Exemptions from the VAT will be limited to raw food, health, medicines and education. Also identified were additional measures on sugary and fatty foods, mining, alcohol and tobacco, gambling, luxury items and carbon.

With the proposed five tax policy packages, the government stands to lose P198.3 billion but collect P566.4 billion in new taxes resulting in a net gain of P368.1 billion by 2019. These figures, according to Gamboa, are worrisome.

“Net gain from the trade-off between lower personal income tax and higher excise tax on oil, lesser VAT exemptions and new levies on sugary and fatty foods will be P220.7 billion. Meanwhile, there will be a P1-billion net loss from the swap between lower corporate income tax and rationalization of fiscal incentives. This means that Duterte’s new revenue-generating measures will be borne mostly by salaried workers!” Gamboa said.

He added that public transportation subsidies and the Conditional Cash Transfer (CCT) program would not be enough to cushion the effects of price hikes. He stressed that livelihood assistance and employment for affected sectors should be assured and could be funded by earmarking proceeds of the increased tax on oil for this purpose.

“We need to know. The public deserves to be consulted. Will the proposed revenue measures facilitate economic gains to ‘seep through’ or will it force hard-earned money to pour out of ordinary people’s pockets?” Gamboa said in allusion to the Duterte administration’s promise of equitable prosperity for all. ###

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