Stalled tax reform program
The P3.35-trillion national budget of the Duterte administration for 2017 is now in effect.
Consistent with the President’s socioeconomic agenda, the budget has allocated funds for universal healthcare, free tuition in state universities and colleges, free irrigation, additional social services, and pension for war veterans and centenarians.
The budget has made provisions also for funds for various infrastructure projects that aim to improve the flow of trade and promote inclusive growth.
The appropriations were made on the assumption that the Bureau of Internal Revenue and Bureau of Customs will meet their collection targets for the year.
A substantial shortfall in revenue collection would derail the administration’s plan to slash nationwide poverty incidence to as low as 13 percent when it bows out of power in 2022.
A significant element of the administration’s development agenda is the enactment of laws that would rationalize and improve the country’s revenue generation and collection systems.
This would involve, among others, the reduction of individual and corporate income taxes, higher fuel excise taxes, additional levy on sweetened products and removal of exemptions from value-added tax.
The proposed measures will make the rich pay more and give the poor financial relief, encourage business investments and increase the sources of revenue for the government.
Six months into the Duterte administration and with the President’s political party in control of Congress, it is reasonable to expect that these measures—at least the initial phase—have breezed through first reading, discussed at the committee level, and a consolidated draft is ready for consideration in the plenary.
Unfortunately, none of these events have happened. The proposed tax reform program remains in the back burners of Congress and there is little indication that it would go to the forefront soon.
During the last six months, the lawmakers spent a great deal of their time talking about extrajudicial killings, illegal drugs activities in the National Penitentiary, restoration of the death penalty and a host of other issues that have minimal bearing on our social and economic development.
With the way these issues were debated and sharp words exchanged over them, the impression is created that the country’s continued existence depended on their resolution. The lawmakers simply enjoyed talking about them to anyone who cared to listen.
As if to add insult to injury, the House of Representatives (aptly called the Lower House) speedily approved a bill that would restore a regressive two-tier cigarette excise tax scheme and replace a progressive unitary cigarette tax law enacted in 2012.
Wow! Whoever orchestrated this move must have presented millions of pesos worth of arguments to convince the lawmakers to railroad the bill to its approval.
So what’s keeping the honorable (ugh!) lawmakers from giving some attention—not even priority, mind you—to the tax measures that are designed to make life better for 99 percent of Filipinos? There’s probably no lobby money (or financial award) to be gained from the tax reform package.
Or are these tax reform issues above the level of their intellectual capacity to comprehend that they do not want to take them up?
Unless President Duterte certifies on the urgency of these bills or personally intervenes for their enactment, it is doubtful if Congress will take the initiative to calendar them for discussion this year.
It’s time the President take a break from his incessant (and already boring) campaign against illegal drugs in the country and take an active hand in supporting his economic managers in rightsizing the country’s skewed tax collection system.
