PRESIDENT Rodrigo Duterte on Monday said he will pursue a tax reform program that will include the lowering of corporate and income tax rates in the country.
“My administration will pursue tax reform towards a simpler and more equitable and more efficient tax system that can foster investment and job creation,” Duterte said in his first State of the Nation Address.
“We will lower personal and corporate income tax rates and relax the Bank Secrecy Law,” he added.
Tax Management Association of the Philippines (TMAP) president Benedict Tugonon lauded the President’s announcement, saying that a tax reform program was long overdue.
“We are very pleased to hear the statement of the President and this is what tax payers have been waiting for a very long time—a mandate from the President to Congress to push tax reform, particularly towards the simpler and more equitable,” Tugonon said.
Tugonon noted, however, that the lowering of the income tax rates will also result in lower revenue collections for the government.
The current income tax brackets were set in 1997 under the National Internal Revenue Code, and are among the highest in Southeast Asia.
A Filipino employee earning a little over P500,000 is taxed 32 percent while his Thai counterpart earning the equivalent income is only taxed 10 percent.
On the other hand, Tugonon said the TMAP’s position is that the current 32-percent corporate income tax can be cut to 25 percent to be at par with other countries in the region.
At the same time, Tugonon said, a relaxation of bank secrecy laws would lead taxpayers to adopt “a more compliant attitude” toward paying taxes.
“TMAP has always advocated that an adjustment in the tax brackets is long overdue and Congress must adjust them immediately,” he said.
Bureau of Internal Revenue Commissioner Caesar Dulay, who is tasked to collect about 60 percent of the 2016 P3.002-trillion budget, could not be reach for comment as of press time.
Insurance Commissioner and Anti-Money Laundering Council member Emmanuel Dooc welcomed the President’s statement.
“The AMLC has been supportive of lifting the Bank Secrecy Law. It has frustrated us in our efforts to fight money laundering and terrorist financing. We have proposed this in the amendments to Amla and this time I’m hopeful that such move shall make a headway and prosper,” Dooc said in a text message.
Also in his Sona, Duterte said his administration would work to ease the process of transacting with the government.
“We will enhance local business environment by addressing bottlenecks in business registration and processing [and] streamline investment applications,” Duterte said.
He directed all concerned agencies to reduce the number of steps “down to the barest minimum” of three days to process permits and clearances.
The President also vowed to relax the restrictions in the economy to facilitate the entry of more investments and develop industries like manufacturing, agriculture and tourism as intensive employment generator for Filipinos.
“We shall continue promoting investments that will generate thousands of jobs each year. Jobs that are suitable for the poor and less skilled members of the workforce,” he said.
Duterte said he recognized the need to improve the skills of Filipino workers and to invest in human capital and support activities that will enhance local manpower skills.
The Trade Department, halfway through 2016, has vowed to continue to reduce steps in business-related regulatory procedures.
The department heads the Ease of Doing Business task force that identifies bottlenecks, redundant steps and unnecessary requirements in government transactions.
Senate President Aquilino Pimentel III, meanwhile, pushed a bill seeking a one-time tax amnesty on estate taxes, inclusive of fines, interest, surcharges, penalties and other payments.
He said his proposed measure would serve as a reasonable tax relief, encourage payment of estate taxes, and free up and release properties to commercial use to increase and complement the government tax collection drive. With Macon Ramos-Araneta
Citing statistics from the Bureau of Internal Revenue, Pimentel said there is a wide mismatch between the number of estate tax returns filed in the past years against the total number of reported deaths.
The BIR record, he said, underscored the dismal rate of tax compliance, adding that death in a family is usually marked by prolonged grief that any mention of estate tax obligation is not observed or practiced. With Macon Ramos-Araneta
