Cabinet officials back Duterte's tax reform plan

MANILA, Philippines – Six members of the Cabinet expressed their overall support for the comprehensive tax reform package being proposed by the administration of President Rodrigo Duterte.

The following Cabinet officials said during a House ways and means committee hearing on Monday, March 6, that they are backing the tax reform package:

Pernia said the Department of Finance (DOF) has the "full and unqualified support" of NEDA.   

"In fact, we were closely consulted by the finance department when it was crafted so there's really no kind of misgivings or reservations on the tax package," said Pernia.  

Tugade echoed Pernia's statement, telling congressmen the tax reform package is needed by the country.

"The DOTr by my presence here manifests its unconditional support to the comprehensive tax program of [the] Department of Finance. Kailangan po natin ito. Napag-aralan po. Pinasadahan po namin sa maraming repaso (We need this. We studied this. We reviewed this many times)," he said. 

For Villar and Briones, meanwhile, the proposed tax reform package of the Duterte administration will benefit their respective agencies' projects in the long run.  

"I would like to give my full and unequivocal support to this tax package. Given the significant increase in our department's budget and the 5.3% of GDP and infra spending, I think it's very important that we give our full support to this tax package," said Villar.  

Briones said the DOF's proposal was "vigorously" debated on by the Cabinet.

"Therefore it is the result of reason, debate, discussions at the Cabinet level and we are now looking forward to the support of the legislature for this tax reform package," said Briones. 

"I represent 700,000 employees of the government… We are responsible for 2.5 million learners. This year we are going to introduce K to 12 for senior high school, which will prepare our students for the world," she added.  

The DOF's first batch of tax reforms includes the restructuring of the personal income tax system and the expansion of the value-added tax base by reducing the coverage of its exemptions. (READ: Duterte's tax reform: More take-home pay, higher fuel and auto taxes)

The maximum rate of personal income tax will be reduced over time from the current 32% to 25%, except for high-income earners. The tax reform package also includes a proposal to exempt those earning less than P250,000 from tax payment.

Diokno said lowering the income tax rates in the Philippines is "long overdue."

"We are taxing the income of 1/3 of the people and it has to be adjusted for fairness," he said. 

Revenue measures necessary

But the DOF is also proposing higher fuel excise tax and the restructuring of the excise tax on automobiles, except for buses, trucks, cargo vans, jeeps, jeepney substitutes, and special purpose vehicles.

According to the DTI's Lopez, this is where his department has reservations about the tax reform package.

He said they are currently coordinating with the DOF regarding the "fine-tuning" of the tax brackets involving the excise taxes on vehicles.

"But in general po, we support the provisions of the tax reform package," said Lopez.

During the hearing, Finance Secretary Carlos Dominguez III said the Philippines' tax reform system is "direly in need of reform."

"Our personal and income tax rates are much higher than the rest of the region. We need to bring them at par to be competitive for investments…. By lowering tax rates to the regional environment, we hope to attract even more investments to sustain a higher growth. To compensate for lower personal and corporate income taxes, we need to introduce new revenue measures," said Dominguez. 

He explained that the Duterte administration's tax reform proposal will increase revenues by P800 million.

"This will go a long way in assisting the projected P1-trillion expenditure for infrastructure," said Dominguez. 

Other lawmakers, however, have slammed the tax reform proposal as "anti-poor." – Rappler.com

Mara Cepeda

Mara Cepeda writes about politics and women’s rights for Rappler. She covers the House of Representatives and the Office of the Vice President. Got tips? Send her an email at mara.cepeda@rappler.com or shoot her a tweet @maracepeda.

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