By Maricel V. Cruz
VICE President Jejomar Binay on Thursday slammed Malacañang’s push to increase the value-added tax to compensate for lower tax collections in case the tax reform bill becomes law, saying that would defeat the goal of giving workers a higher take-home pay.
“It is easier to give promises and make plans, but what we need is tested and competent executive ability,” Binay said.
The government has proposed to raise the VAT to 14 percent to make up for any loss to be incurred from lower tax rates should the tax reform bill be approved.
“The Philippines already has the highest VAT rate in the region, so increasing the VAT should only a last resort,” Binay said.
“The country’s tax system is both burdensome and exasperating.”
Binay made his statement even as the independent bloc in the House of Representatives expressed hope that Congress will be able to give priority to passing the bill restructuring the country’s income tax rates when Congress resumes session in November.
Leyte Rep. Ferdinand Martin Romualdez, the bloc’s leader, said he was confident that Speaker Feliciano Belmonte Jr. would fulfill his promise to champion the cause of Filipino workers by fighting for the approval of the bill that would lower their tax payments.
“We are very hopeful that this will not end up as an empty promise,” Romualdez said.
Belmonte, for his part, said the House will pass a version of the bill that will lower workers’ income tax without compromising the revenue collections.
Binay said lowering the tax rates would allow consumers to spend more money on the things they need, and that the government would be able to recover some of the short-term revenue losses through increased consumption taxes without raising the value-added tax.
“Instead of being fixated on the VAT, we should look at a menu of options including improved tax collection efficiency and a more aggressive campaign to catch tax evaders and smugglers,” Binay said.
“The recent report that the Philippines has the most tedious tax payment system underscores the urgency of tax reform in our country. It only brings hardship and misery to ordinary workers.”
A study by the international audit firm PricewaterhouseCoopers put the Philippines in 127th place among 189 economies in the ease of paying taxes.
The study says businessmen in the Philippines take 193 hours to pay 36 different kinds of fees and taxes each year.
“How can we encourage foreign investors to put money here if we are going to make it difficult for them to do business in our country?” Binay said.