Department of Finance (DOF) officials are set to propose new revenue sources as other government agencies are bent on slashing not only income but also corporate tax rates.
In an interview last week, Finance Undersecretary Jeremias N. Paul Jr. said the DOF before the end of this month would submit to the Lower House a “package deal” of measures to make up for the revenue losses brought on by the income tax reform.
Last week, members of the House committee on ways and means held a technical meeting to consolidate the pending bills that sought to reduce income tax rates.
During the meeting, Paul maintained that the DOF would stick to its stance of putting in place a “comprehensive, non-piecemeal and, as much as possible, revenue-neutral” tax reform rather than just touching on the populist income taxation.
“We have to protect the revenue base to ensure that public services and infrastructure spending are sustained,” the DOF official pointed out. “Since we cannot do anything about this anymore, and we’re quite sure this will be passed by Congress, we are looking for ways to plug the [revenue] leaks.”
Among the potential measures that the DOF is currently mulling over is the increase in taxes slapped on other products, including petroleum.
Paul noted that, since about 60 percent of oil consumption in the country came from those in the top-tier income strata, mostly the rich would be affected by this measure.
At least 14 measures are pending in the Lower House, all proposing amendments to the National Internal Revenue Code of 1997 in a bid to lower income tax rates. The DOF expects P30 billion in foregone revenues each year once the taxable income brackets are indexed to inflation.
The World Bank also urged the Philippine government to increase the excise tax slapped on oil products, which remained unadjusted since 1997.
Philippine-based World Bank senior economist Karl Kendrick T.Chua had said that the revenue losses due to non-adjustment of rates were equivalent to P120 billion a year, or about 1 percent of the gross domestic product.