Off the beaten tax
Allies of the Duterte administration in Congress seemed ready to approve big cuts in taxes, mainly personal and business income taxes, promising to do them all in a year.
But why not—when this issue has already gone through some beaten tracks during the Aquino (Part II) administration, if only to adjust the tax rates to inflation to ease the burden on the citizenry?
The income tax rates were more than 20 years old, for one, and the inflation rate already gobbled up the buying power of everybody’s income.
In the past six years, the business sector lobbied the Aquino (Part II) administration long and hard for lower rates, since we had the highest rates in Asean, hardly helpful in attracting foreign investments away from our neighbors.
The previous Congress was also ready to pass its version of the tax reforms by October last year, pursued in the House of Representatives by Rep. Romero Quimbo and in the Senate by Sen. Ralph Recto.
Reports at time said our previous leader, Benigno Simeon aka BS, threatened to veto the bill. It seemed that he took the side of the Department of Finance.
On the surface, the DOF said it had rejected the reforms because they would reduce government tax take from business and personal income by some P30 billion a year.
The DOF demanded from Congress other measures to cover for the “revenue loss,” among them the loosening of the bank secrecy law, which it claimed would help the BIR catch some tax cheats among the rich.
In the business sector, the word was that the DOF was just concerned with the country’s credit rating abroad, the “investment grade” that the past administration brandied about as its biggest achievement.
With the sure veto from Malacañang, the long-in-coming much-awaited tax reform bills thus died in Congress.
This time around, the Duterte administration would take the debate on tax cuts off the beaten tracks, making the reform as one of its top priorities.
The business sector expected the reforms to be just a matter of time, but the biggest question remained: What would be the new rates?
Finance Secretary Carlos Dominguez, the childhood friend of our new leader Duterte Harley, reportedly said the administration would cut income tax rates to 25 percent.
That would probably be the uniform rate even for business, which was set at 30 percent more than 20 years ago, and for personal income, now at 32 percent maximum.
Still, the proposed bills filed in both the Lower House and the Senate did not contain measures to help undo the “revenue loss” from tax breaks.
And from what I gathered, a debate raged within the economic team of our new leader Duterte Harley on the ways that the government could recover the revenue loss.
One side seemed to favor an increase in the sales tax known as VAT, or the value added tax, from its current rate of 12 percent to something like 14 or 15 percent, while the other side would go for a freeze in the VAT rate.
Other proposals sought to increase excise tax on oil and reduce the tax breaks given by the government to business.
At the end of the day, however, any way the Duterte administration would try to recover the “revenue loss,” business would simply pass it on to the public.
There, ultimately, the tax-beaten citizenry of this republic would still pay for all of it. In short, no tax relief at all, just a change in the way we pay for it!
Really, why could the government not just take the “loss” and in turn cut all the excesses in the already fat budget?
* * *
OVER at the BCDA, the Bases Conversion and Development Authority, management was said to be hurrying the disposal of two prime properties.
The Duterte administration had yet to install its own management team in the corporation.
The carryover BCDA management thus offered some silly reason for the haste: The deals would help boost the coffer for the Duterte administration.
There—our beloved BCDA actually did not want to wrap up the questionable deals for the kickbacks and the commissions! Nice try!
On another issue, the BCDA as a government corporation was exempted from the Salary Standardization Law, one out of some 26 government-owned or -controlled corporations, or GOCCs, that did not have to follow the rule.
The top banana in BCDA was said to get some P8 million a year in salary and allowances, excluding some other perks, mind you.
It so happened that the BCDA never had to submit to anybody for review and approval any semblance of operating budget.
As a practice, those GOCCs only had their boards to approve their budgets, if indeed they even bother to formulate them.
The reasoning went something like this: The GOCCs like BCDA were independent outfits because they did not ask the government for the money.
Question: Where in heaven did corporations like BCDA get its initial capital in the first place?
The BCDA in the 1990s received some P175 million from the Ramos administration when it was formed to oversee the “privatization” of government properties.
Moreover, the BCDA got about 75 percent share in the “rental” income from the properties that came from the government.
I thought those were government money!
