DAVAO CITY—The Duterte administration plans to reduce individual and corporate tax rates and at the same time cut down on foregone revenues by tightening on the perks given away to investors as well as value-added tax (VAT) exemptions.
“The new administration will definitely review the tax system, initially to update the income tax brackets and eventually to lowering corporate and individual tax rates. We wish to see our workers having more disposable income to do as they wish,” incoming Finance Secretary Carlos G. Dominguez told business leaders during the first day of “Sulong Pilipinas: Hakbang Tungo sa Kaunlaran” consultative workshop on Monday.
Also, “our corporate tax rates will be adjusted to be competitive with the rest of the region to make our economy more competitive for investments,” Dominguez added.
The incoming Finance chief nonetheless pointed out the need to “broaden the tax base even more to compensate for lower rates.”
Dominguez also sought comments from the business community with regards proposals to raise the VAT from 12 percent at present.
A Department of Finance study had proposed to jack up the rate to 14 percent.
In a press conference, Dominguez said the incoming economic leaders were looking at cutting on a long list of VAT-exemptions to compensate for expected revenue leaks from lower taxes and rates.
He noted that in Thailand, the VAT rate was a lower 7 percent and it had a bigger economy, but its share of VAT collections to the gross domestic product (GDP) of 4.2 percent was similar to that in the Philippines, which means there was inefficient collection here.
Dominguez later told reporters that among the VAT exemptions, those covering senior citizens as well as persons with disabilities may be kept.
Dominguez as well as incoming Budget chief Benjamin E. Diokno also mentioned the possibility of adjusting the excise taxes slapped on fuel, which had also remained unchanged for almost two decades.
For Diokno, another measure they will push for is the rationalization of tax incentives being given away to investors, noting that there were about 200 laws allowing the grant of fiscal perks.