No income tax cuts within Aquino term

Internal Revenue Commissioner Kim Henares. INQUIRER FILE PHOTO

WHILE pending legislation in Congress aimed at slashing income tax rates were needed, Commissioner Kim S. Jacinto-Henares of the Bureau of Internal Revenue (BIR) deemed these would not become law during the Aquino administration.

In a report, the European Chamber of Commerce of the Philippines (ECCP) said Henares expressed during their Aug. 7 meeting that “while she feels that the intentions of (Marikina City Rep. Miro) Quimbo and Sen. (Sonny) Angara are good and needed [bringing down personal and corporate income tax rates], she doubts that this can still be finished under the 16th Congress.”

Economic managers earlier said next year’s national elections, specifically potential voter sentiment, were somewhat getting in the way of the comprehensive tax reform package being proposed by the Department of Finance (DOF).

Being pitched for President Aquino’s approval, the DOF’s tax reform package aims to drastically ease the burden of income taxpayers while also slapping new or higher taxes on consumption. It includes policy measures entailing legislation as well as tax administration improvements, which the DOF claimed would lead to a “competitive, equitable and progressive” tax regime.

Last week, finance officials urged legislators to introduce bills that would ease restrictions in the bank secrecy law for tax purposes and make tax evasion a predicate crime, claiming that these two measures would facilitate speedy discussions on comprehensive tax reform.

Legislation that would allow collecting previously foregone revenues from upper-tier, fixed-income earners who pervasively evade tax payments could give the government more fiscal space to bring down income tax rates, finance officials said.

During the meeting with the ECCP, Henares also told European businessmen that “she is not willing to again discuss VAT (value-added tax) refund” as “in her view, everything has been said and she is not changing her mind on this issue.”

The ECCP was one of the 16 business groups that last year sought the repeal of the BIR-issued Revenue Memorandum Circular (RMC) No. 54-2014, under which claims for VAT refund or credit not acted upon by the commissioner within the 120-day period as required by law would automatically be deemed a denial of the application.

“With its interpretation that BIR inaction on VAT refund applications is ‘deemed denial,’ said RMC effectively encourages the BIR to abdicate its administrative duty to process refund claims by compelling taxpayers to pursue judicial claims with the CTA (Court of Tax Appeals),” the business groups had said, adding that the circular “removes the fundamental right of a taxpayer to an administrative appeals process.”

Henares and the DOF did not repeal RMC 54-2014.