Incoming finance secretary Carlos Dominguez called the Finance Department’s Comprehensive Tax Reform Program a “joke.”
Dominguez told reporters in a media round table discussion Finance had more than six years to come out with the tax reform program and released the proposed package with just 40 days left in the current administration.
“You can’t believe that [CTRP]. You’re gonna put it in the last two seconds? You had six years to do it. I mean what kind of joke is that,” Dominguez said.
Dominguez also said he was lukewarm with the said proposal.
“Yes it is safe to say I am lukewarm. It’s better to say that I am absolutely appalled,” he said.
Dominguez said the Duerte government might not adapt the whole program. “Of course we will read it. If it matches what we want in accordance with what we want, of course we will adopt it,” he said.
The DoF recently released a proposed tax reform package on May 23 and recommend it to the next administration.
The government, under the tax reform package, is expected to gain about P164.5 billion to P351 billion in additional revenues if the Duterte administration pushed it.
Included in the program is the exception of about 11 million salary earners from paying taxes. For individual wage earners, the tax rates will be lowered from the current 32 percent to 25 percent. The corporate tax, meanwhile, will reduced to 25 percent from 32 percent.
The measures will cost the government around P160 billion to P224 billion in foregone revenues during the first year of implementation.
Losses from the measures, however, will be offset by the expansion in the value added tax from 12 percent to 14 percent. The higher VAT is expected to generate an additional P162 billion in revenues.
Dominguez said the tax exemption for the 11 million salary earners would be useless ifvthe value added tax was raised.
“You raise it [tax exemption] and then you raise the VAT. Is that an exemption?” Dominguez asked.
Another revenue source under the CTRP is the increase in excise tax on petroleum products, which will gain P132 billion.
The equalization of tax treatment for self-employed and professionals, meanwhile, will generate an additional revenue collection of P2 billion.
The passage of the fiscal incentives rationalization bill will add P5 billion in revenues, while the repeal of Bank Secrecy Law for tax purposes will generate another P87.5 billion to P210 billion.
Dominguez said the incoming government would read and study the proposal. “Were going to do what we want. If it fits, we’ll copy. If it’s not, forget it,” he said.