The House of Representatives will slash fiscal incentives and jack up sin taxes to boost government revenues and ensure stable economic growth.
In his opening speech at the second regular session of the 15th Congress, Speaker Feliciano Belmonte Jr. said: “We must drastically improve tax administration and plug leakages in our tax system if we are to increase revenues and adequately finance needed services and infrastructure, while staying true to our promise against the imposition of new taxes.”
Belmonte identified the tax perks given to local and foreign investors as a major drain on the government’s revenue collection efforts. “We must prioritize the rationalization of our fiscal incentives and remove unwarranted benefits which erode our tax base but fail to increase the attractiveness of our country as an investment destination,” he said.
Belmonte also pushed for the removal of tax exemptions of preferred industries that lead to “leakages and render cumbersome tax administration.”
Aside from fiscal incentives and value-added tax benefits, Belmonte said it was about time to restructure the excise taxes on tobacco and alcohol. ”The prevailing multi-tax rate classification of cigarette and alcohol products and the pegging of sin taxes to 1996 price levels,” he said, has “convoluted the tax system and shrunk the tax base, dampening the government’s revenue efforts and essentially depriving the public of resources which could have been used to fund the most basic of services.”
Belmonte said these efforts would negate any need for new taxes while generating money needed for state expenditures such as universal health care.
In his speech, Belmonte said the House played a role in the decline in self-rated poverty, the upgrade of the country’s credit rating, and higher employment levels in the first year of the Aquino administration.
“These turnabouts did not happen by miracle or chance. They were the result of deliberate decisions and policies which this chamber and each of its members helped will into reality,” said Belmonte.