OPPOSITION lawmakers on Tuesday aired concern over the plan of the Duterte administration to lower personal and corporate income taxes and offseting the revenue losses by increasing excise taxes on fuel.
Reps. Edcel Lagman of Albay and Tomas Villarin of Akbayan party-list said the tax reform package being pushed by the administration’s economic managers, led by Budget Secretary Benjamin Diokno and Finance Secretary Carlos Dominguez, will be an added burden to the Filipino people.
“There will be an additional tax burden” on the part of the Filipino “masses, particularly the consuming public [when the excise taxes are enacted],” Lagman said.
Lagman said the proposal to lower personal and corporate taxes and increase the taxes on fuel as a consequence will “eventually burden consumers.”
Villarin, for his part, was apprehensive that the projected revenue losses, amounting to P173 billion, will result in massive cases of tax evasion or avoidance by unscrupulous firms.
“That [lowering of taxes etc.]would be practically passed on to consumers. In offsetting this amount, to whom will this burden be passed? What are the regulatory measures that will be put in place to make sure there will be no pass on?” Villarin asked.
This developed as Camarines Sur Rep. LRay Villafuerte said the Duterte administration’s plan to ramp up spending in physical and human capital is on the right track to sustain high economic growth and make it inclusive, but urged government agencies to should first improve their absorptive capacity to ensure the efficient implementation of this pro-poor strategy.
Villafuerte, a neophyte lawmaker, said the government’s goal to widen the budget deficit to three percent of the Gross Domestic Product to carry out this spending upsurge could overwhelm government agencies struggling with low absorptive capacity in carrying out their programs and projects under Malacañang,’s 10-point socioeconomic agenda.
“I believe that our President has the political will to reverse the underspending of the past that has made our robust economic growth meaningless to our poor countrymen. But disbursing funds and spending them wisely are two different things. Government agencies must shape up and be prepared to fully spend their increased allocations effectively and efficiently,” Villafuerte said in a statement.
Villafuerte cited observations made by economic experts, such as Shanaka Jayanath Peiris, the International Monetary Fund resident representative to the Philippines, who noted that the government has been underspending for the last 10 to 15 years, which might account for the low absorptive capacity of state agencies.
Former Socioeconomic Planning Secretary Cielito Habito pointed to the previous administration’s poor absorptive capacity, which, he said, hindered government effectiveness, rather than the lack of resources, because agencies were not used to having massive funds at their disposal, Villafuerte noted.
Dr. Milwida Guevara, a former finance undersecretary for revenue generation and tax reform and who is now the chief executive officer of the Synergeia Foundation, has cited low absorptive capacity as the primary reason behind the delays in public bidding and procurement of supplies as well as the slowdown in the implementation of much-needed infrastructure projects, such as roads and school buildings.
“The executive branch needs to factor in these valid observations when crafting specific projects and programs for infrastructure and education,” Villafuerte said.