DOF exec defends tax reform package

AN OFFICIAL of the Department of Finance debunked the claims that the proposed tax reform package of the Duterte administration is anti-poor.

“It’s a very lazy argument,” said Finance Assistant Secretary Ma. Teresa Habitan.

Habitan outlined the benefits of the comprehensive tax reform package at the start of the three-day convention of the Philippine Councilors League at SMX Convention Center in Bacolod City Wednesday, June 14.

“You have to look at how we’re going to spend the money because they’re so still so many gaps in our education system, health, and social protection we need to finance. We need more budget for that. And who benefits better government services? It’s really the poor,” she said.

“We need to uplift them from that position. There should always be process to uplift more and more people out of poverty, that’s the intention of tax reform,” she added.

Among the proposed new taxes included in the DOF-drafted bill are excise tax on fuel products, excise tax on particular automobiles, expanded value-added tax (VAT) coverage and abolishing special laws granting VAT exemptions to several sectors.

In her presentation, Habitan outlined the projections if the tax reform bill will not be passed in the Congress.

Without tax reform, the government will stand to lose 108,000 public school classrooms, 460,947 public school teachers, 10,383 rural health units, 83,143 barangay health stations, 227 provincial hospitals, 6,136 kilometers of paved roads, 135,000 kilometers of temporary bridge upgrades, and 457,627 hectares of irrigated land, according to her report.

Habitan stressed that the tax reform should be taken as a “package so people can see the benefit of the entire reform.”

She said that if the lawmakers will pass only the income tax component, it would be instantaneous happiness for many but it equates to revenue loss to government amounting to P137 billion.

She pointed out that it would reduce the budget of the government and the Internal Revenue Allotment of the local government units will also be affected.

“Our vision is for a better Philippines. And the only way to do that is to look at this as an entire package,” Habitan said, adding that as an offset on cutting the income tax, the government has to increase taxes on consumption and move some VAT exemptions.

She added that the government has also introduced administrative reforms, and not only policy measures, including the institutionalizing fuel marking for oil imports and production to lessen the smuggling of oil products.

Moreover, Habitan summarized the programs the government will implement to mitigate the impact of higher oil excise.

These include targeted transfers (P300 per month for one year to the poorest 50 percent of households, or 10 million, to mitigate the temporary and moderate increase in prices); Pantawid Pasada (cash cards to public utility vehicles to offset the increase in excise taxes so fares don’t need to increase); and public transport modernization (subsidies to public utility vehicles to convert to more efficient engines and bodies).

She also said that inflation remains low and stable despite significant increase in diesel prices in 2016.

“We’re debunking the story they are saying that higher oil excise will automatically mean very high inflation, when in fact it’s not true. The increase to diesel last year was 75.9 percent, but the inflation remains,” Habitan explained.

“Tax reform when seen as a package provides benefits to 99 percent of Filipinos. It is an investment for our future. No investment is easy. There are short-term challenges but everyone benefits in the long term,” she added.

The first package of the tax reform proposal was approved by the House committee on ways on means last month.

Habitan said she is hoping to get “the same kind and quality of support from the Senate,” adding they already held several briefings on the provisions of the proposal to the senators.

“We’re hoping that when it reaches bicam (bicameral conference committee), we’ll have a better and improved version of the tax reform package,” she added.
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