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Friday, March 29, 2024

Tax reforms to hit poor, group says

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THE Freedom from Debt Coalition warned the Duterte administration on Monday against regressive effects of its proposed five-tax policy package.

While the group welcomed the government’s effort to reform the “outdated” 19-year-old tax scheme, the group’s secretary-general Sammy Gamboa said the ordinary wage-earners would have to suffer the brunt of the five-tax policy.

“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,” he said.

He is concerned 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,” he said.

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The Finance department earlier revealed plans to cut tax rates on individual and corporate income, fiscal incentives to investments, property and capital income, and increases in excise tax on oil, property valuation, and stocks traded in the stock market.

In addition, exemptions from the value-added tax would be limited to raw food, health, medicine and education.

Also identified were additional measures on sugary and fatty foods, mining, alcohol and tobacco, gambling, luxury items and carbon.

According to Gamboa, under the proposed five-tax policy packages, the government would stand to lose P198.3 billion, but would collect P566.4 billion in new taxes resulting in a net gain of P368.1 billion by 2019.

“These figures are worrisome,” he said. “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.” 

Gamboa said there would be an anticipated 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,” he cited.

Public transportation subsidies and the conditional cash transfer program known as Pantawid Pamilyang Pilipino Program  would not be sufficient to cushion the impact of price hikes, he raised.

Government must also earmark proceeds of the increased tax on oil for the livelihood assistance and employment of the affected sectors.

“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 asked. 

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