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Tax deformed package

/ 12:25 AM April 03, 2017

People who complain about taxes can be divided into two classes: men and women.”

Its author unknown, the quotation nevertheless fits the status of the comprehensive tax reform package (CTRP) of the motor-biking Duterte Harley.

His economic team is pushing hard for CTRP in Congress, hoping to boost the economy with higher government spending while shifting the tax burden to the rich.

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Yet the administration is getting all sorts of complaints from unlikeliest of fronts, including its allies in Congress and even certain members of the Cabinet.

They attack some portions of the CTRP, particularly the higher taxes on fuel and new cars, although they are silent on the proposal to cut income taxes.

They are saying, in effect, “just do not tax us,” period.

The administration wants the CTRP to raise more revenue that it can spend on infrastructure, education, health care and “dole outs.”

Under the proposal, additional revenue can come mainly from the tax increase on fuel and cars. The issue creates most of the noise in media.

Yet the CTRP also seeks to cut individual income taxes, with those earning P21,000 a month, for instance, paying zero tax.

Everybody is certain they are the majority of the population.

Based on the studies done by the Department of Finance, the income tax cuts could reduce government revenue by P138 billion a year.

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The loss must be covered by new taxes. The tax cuts can only happen, according to the CTRP, together with the imposition of new taxes. It is thus a package.

From what I gathered, the House ways and means committee already agreed to approve the CTRP as that—a package.

In the Senate, however, it seems that some senators want to change it beyond recognition, perhaps chop it into pieces, retaining in full only the popular features such as the cut in income taxes.

What do you call it—the tax deformed package?

Anyway, high on their hit list are the increases in fuel tax, or the P3 per liter tax on diesel starting in 2017, going up to P6 per liter by 2020, and the P6 per liter tax on gasoline in 2017, going up to P10 per liter by 2020.

They claim that the higher fuel tax can burden the poor, bringing about onerous increases in transport costs and, thus, unbearably higher food prices.

Really? The claim is a cliché, perhaps the remnant of soaring oil prices in the world market in the past, when oil was a problematic political commodity.

Based on records, as culled by the economic team of Duterte Harley, the richest 10 percent of the population, or about 2 million families, actually accounted for more than 50 percent of the entire fuel consumption in this country.

What is more, the top 1 percent, the richest of the rich, accounted for more than 13 percent.

In other words, those are the people who will pay more for fuel because of the tax increase.

Certain senators and members of the Cabinet also point out that the fuel tax increase can slow down the economy.

Yet records showed that, even at the height of world oil prices in 2008 or 2011, the economy grew by almost 7 percent a year.

Really, the pass-on effect of fuel prices is overrated. The DOF believes the cut in income taxes can more than cover for the slight rise in transport costs.

There is actually a bigger picture in the package: the pipe dream of a prosperous Philippines.

This country is considered a middle-income economy today, but the team of Duterte Harley believes the CTRP can turn it to a “high” middle income economy by 2022, and a high income economy by 2040.

Imagine the benefits: 100 percent Philhealth coverage, upgrading and construction of over 700 hospitals, construction of more than 17,000 barangay health stations, 114,000 new classrooms and 182,000 new teachers.

Plus, of course, we have to build more roads, some 40,000 kilometers of them, and irrigate some 1.3 million hectares of farm land.

The CTRP is one sure way to provide for the future.

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TAGS: comprehensive tax reform package (CTRP), taxes
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