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Now, Recto wants to cut income taxes



MANILA, Philippines—With the Philippines getting an investment grade status for the first time in its history, “Mister e-VAT” thinks that the Aquino administration can now afford to reduce the taxes paid by fixed wage earners as a reward for their contribution to improving the government’s fiscal picture.

Sen. Ralph Recto, the main proponent of the Expanded Value Added Tax Law in 2005, said taxpayers had contributed between P1 trillion and P1.5 trillion in additional taxes such as the e-VAT, rationalization of automobile taxes and increase in sin taxes, over the last eight years which allowed the government to pare down its budget deficit.

The lower deficit, coupled with robust economic growth, has prompted credit rating agency, Fitch, to raise the Philippines to investment grade status.

“I feel good about it (investment grade rating). But the real heroes are the taxpayers who contributed to improving the fiscal health of the nation. We are now in a better position to spend more on health, education, infrastructure and other socioeconomic services. It will be easier to attract investments and create jobs with lower interest rates,” said Recto.

Not now, Ralph

However, Budget Secretary Florencio Abad Jr. did not agree with Recto’s proposal.

“It’s not the time to do it. On the contrary, our problem is how we can broaden the tax base and dramatically improve our revenue effort. We cannot continue to expand our public investments if we don’t improve revenue generation,” said Abad.

Recto, who lost his reelection bid in 2007 due to a backlash from voters from his sponsorship of the e-VAT law, said he would push for the lowering of taxes in the next Congress. He won a new six-year term in 2010.

“We must show taxpayers that there is light at the end of the tunnel. We may reduce taxes if we consolidate our national government balance sheet by incorporating Pagcor (Philippine Amusement and Gaming Corp.), PCSO (Philippine Charity Sweepstakes Office), royalties from Malampaya, income from the coconut levy income, and improvements in operations and income of GOCCS (government owned and controlled corporations),” said Recto.

But Finance Secretary Cesar Purisima said it was still premature to think about cutting back on taxes. “We are only at 12.8 percent to GDP (gross domestic product) in our tax efforts. We need to reach first 16 percent by 2016,” said Purisima.

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Tags: Aquino administration , e-VAT , Expanded Value Added Tax Law , Florencio Abad Jr. , income taxes , Ralph Recto

  • Zaldy Cabangcala

    Its about time!

    Ordinary Filipinos had suffered enough from your E-vat, how about eliminating the e-vat of food and medicine which many Filipinos can ill-afford to buy. You can also, recommend taxing the businesses of various religious sects which compete directly to Filipino businesses which pay Govt. permits, licenses and taxes. Namputsa naman matagal ng hirap si Juan de la Cruz sa di parehas na labanan. Before I forget, dapat may witholding tax din ang CPP-NPA who are extorting money from Filipino farmers and enterpreneurs

  • Vic_Usi

    What Sen Recto is saying unbelievable. We have a huge classroom shortage, among our many problems.

  • Exo

    The people from BIR knows who are not paying correctly. They do tell those erring taxpayers that they didn’t pay the correct taxes but the problem is they share the savings (from the undeclared taxes) with the delinquent taxpayers. If the delinquent taxpayer owes the government P100M, the BIR personnel will tell the delinquent taxpayer to pay just P30M to the government and the remaining P70M the BIR personnel will share with the delinquent taxpayer. In effect, the delinquent taxpayer saved P35M and the BIR personnel then got P35M.

    Someone should be checking on these BIR personnel since they are not above suspicion.

  • edm365f31

    Tama Recto tell that to the Chinese Federation who always cheat on taxes.

  • tadasolo

    I am for less tax and put pressure on our government especially our senators and congressmen to effectively and efficiently used the people’s money and reduce their reliance on the pork barrel.

    We need to change the narrative on all public officials that this is not their money but people’s money to be used for the people. They treat our money as if they owned it and whenever they spend it we owed it to them. LET US PUT A STOP INTO THIS

  • QritiQ

    Reason why i support the Flat Tax proposal of senatoriable Greco Beljica. Unknown candidate with a huge bright idea.

  • cali

    govt is thinking of how to expand tax base….lifestyle check all govt employees…u will unearth a lot of STOLEN TAXES!

  • Guest

    Tama , di pa panahon para diyan..Papacute lang si recto.

  • Manuel_II

    Efficient tax collection and Tax Investigation if correct tax is being paid (e.g. Residential being used as Office or Warehouse, Professional tax being declared correct, etc.) should be done.

  • Don Ryder

    Yes, Jerome, we do have a problem with collection. But a major problem is we really do have a very small tax base. I am a taxpayer and a voter and as such, I belong to the minority. There are more people who don’t pay taxes and yet, can vote! It’s also about time that we require voters to pay tax regardless of their economic status – rich, middle class or poor. As it is, the middle class are the ones paying the most.

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