Tax reform lobbying continues

As the two houses of Congress consolidate their respective bills containing the first tax reform package, civil society groups on Monday called for the removal of the Senate-approved increase in documentary stamp tax (DST) while also lobbying for higher mining taxes.

In a statement, the Action for Economic Reforms (AER) wanted the members of the House of Representatives belonging to the bicameral committee deliberation on the first package of the Tax Reform for Acceleration and Inclusion (Train) to reject the Senate version passed last week and stick to the measures under House Bill No. 5636 approved in May.

“For the benefit of poor Filipinos who are banking on the sustained sources of revenues from the reformed tax system, we appeal to our legislators from the House of Representatives to keep the reforms on excise taxes on fuel and automobile and lifting of value-added tax and reject the zero-rating on VAT of indirect exporters in economic and tourism free zones,” AER senior researcher Jo-Ann Diosana said.

“The Senate’s version of Train will set the economy for the worse. It shortchanges the Filipino people of the funds that ought to be mobilized to secure the long-term development financing and mitigation of short-term impact of the reforms on the poor,” Diosana claimed.

Diosana also urged legislators “to go back to the goal of the tax reform: Correct structural problems in the personal income and consumption taxes toward a more simple, fair and efficient tax system.”

The AER also quoted former economic planning secretary Solita Collas-Monsod as opposing the slapping of higher DST under the Senate-approved bill as “no senator bothered to ask the effect on capital markets and other business and financial transactions.”

“[Collas-Monsod] also expressed disgust over the Senate bill’s exemption of the real property transactions only because there is one senator with self-interest in real property,” the AER added.

The AER also quoted former finance chief Margarito B. Teves as saying that “some improvements that can be done in the bicameral deliberation of the measures should be on the DST because this would possibly affect overseas Filipino workers.”

Gilberto Llanto, president at state-run think tank Philippine Institute for Development Studies, was quoted by the AER as saying that “the arbitrarily higher DST creates friction costs in capital markets that will aggravate our failure to develop this sector.”

“I call attention to the VAT because it creates distortions. Failure to index certain taxes creates rigidities. Worse, we are introducing more inequity in the system with the automobile tax on lower priced vehicles higher than pricey vehicles,” Llanto added.

Financial Executives Institute of the Philippines president Benedicta Du-Baladad also raised concern about the DST, which raises about P80 billion yearly, of which almost half or P39 million come from capital transactions.

“By doubling the DST rate, we raise transaction costs. It does not have clear reason but to raise revenue. However, this makes us less competitive with our Asean counterparts. The intention of the tax reform was to simplify, make it more equitable and make ourselves more competitive. However, the exercise has become revenue-driven,” she said.

Meanwhile, the SOS Yamang Bayan Network urged slapping a higher 10-percent tax on mineral products rather than just 4 percent under the Senate bill.

“The network pushes for a 10-percent tax on mining activities, a rate that is fair to affected mining communities and local governments. It is contained in the Alternative Minerals Mining Bill that is gearing up for second reading in the House of Representatives,” Jaybee Garganera, Alyansa Tigil Mina national coordinator, said.