Another crack at tax reform
It is apparent the tax reform initiatives of the then Duterte administration would be pursued by the present administration.
Last week, Finance Secretary Benjamin Diokno told the Senate ways and means committee of the administration’s plan to push for the past administration’s bills on real property valuation and assessment reform and passive income and financial intermediary taxation.
Legislative approval would also be sought for the imposition of a 12-percent value added tax on digital goods and services, a P20 per kilogram excise tax on single-use plastics and the rationalization of the mining industry’s fiscal regime.
In light of the supermajority of the administration’s political allies in the two chambers of Congress, those bills stand a good chance of being enacted into law. The only question is just how fast, if at all, that would happen.
Traditionally, Congress, as a matter of courtesy, gives a new administration a pass on its initial legislative proposals to enable it to meet its election promises.
But there is a caveat to that expression of goodwill—the administration’s point persons in Congress, including its legislative liaison, have to take the proper steps to have those bills calendared, debated and voted on in the committee and plenary levels.
For that process to succeed, it is essential that the administration’s key officials be responsive to or accommodating of the lawmakers’ requests for financial support for the projects for their constituencies.
It’s a classic case of “you scratch my back and I’ll scratch yours.”
Although the Duterte administration enjoyed supermajority support in Congress, it was unsuccessful to get through the legislative mill the tax reform packages it touted would lift the country out of its economic problems.
Duterte, who left the management of the country’s financial affairs to his economic managers, had to certify three of those bills as urgent to ensure their enactment.
According to some financial analysts, had those tax reform bills become law before the pandemic, the country would have sharply reduced its foreign and local borrowing and the adverse economic problems the country is going through at present would be less severe.
That’s water under the bridge, so to speak.
The challenge to the Marcos administration’s economic managers is to learn from the experience of the past in shepherding through Congress the bills needed to bring the economy back to prepandemic levels, or better.
That task may be easier for the bills on real property valuation and assessment reform, and passive income and financial intermediary taxation because they have earlier been approved on final reading by the House of Representatives.
The ball is now in the court of the Senate. Considering the extensive hearings these bills went through at the House, there may be no need for the senators to go through the review process all over again before taking them up at the plenary.
Besides, the impact of those bills on Filipinos’ daily cost of living is expected to be minimal.
The bill on real property valuation would, in substance, enable local government units to raise revenues to meet the needs of their constituencies through periodic and uniform valuation of real properties in their areas of governance.
With regard to the bill on passive income and financial intermediary taxation, it aims to, among others, harmonize the tax rates on interests, dividends, capital gains and financial intermediary transactions, which are all areas of concern primarily of the A and B sectors of our society.
In effect, the “haves” would be compelled to share with the government a portion of their financial gain from transactions where they have no active participation.
Only time will tell if this administration would have a better record compared to its predecessor in the area of tax reform. INQ
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