PH tax regime ‘not friendly’ to environment–BIR chief

THE PHILIPPINES has a tax regime that is not friendly to the environment, but the government is working to ensure that revenues trickle down to communities being affected by environmental degradation, according to Commissioner Kim S. Jacinto-Henares of the Bureau of Internal Revenue (BIR).

In a presentation at the Sixth International Tax Dialogue Global Conference on Tax and the Environment in Paris, France, last week, Henares admitted that the country has an “environment-unfriendly tax structure.”

For one, Henares noted that “[a]t present, the Philippines’ vehicle tax structure favors older vehicles with lower tax rates,” while “registration rates for older vehicles are also lower than for newer vehicles, which are arguably friendlier to the environment, in terms of lower emission rates.”

Other challenges in the administration and design of environmental taxes in the country include the absence of region-wide regulatory institutions and systems that manage as well as monitor ecological impact; constrained sources of financing; different economic and governance structures; diverse mix of resources; limited access to skilled labor and technology; poor infrastructure, uncertain policies and laws concerning land and its taxation as well as an uneven playing field, Henares said.

To address these concerns, the BIR chief said there should be “proper [tax] payment to the state as the sole owner of natural resources and for [their] depletion.”

“Fiscal policy should be tailored to the country’s development needs and national policies as there is no ‘one-fits-for-all’ policy,” she pointed out.

Henares said such could be done by imposing royalty, corporate income tax, excise tax and also windfall tax on firms that use up natural resources.

As for mining, Henares cited House Bill No. 5843, which proposes to restructure the fiscal regime governing mining and mineral products, as an appropriate tax policy.

The bill aims to put in place a single fiscal structure slapping a corporate income tax, a 5-percent royalty and a 10-percent surcharge on cash flow for additional government share when prices of minerals are on the upswing.