BUSINESS leaders in Cebu have welcomed the plan of the Marcos administration to impose taxes on digital goods and services.
Cebu Chamber of Commerce and Industry president Charles Kenneth Co said imposing value-added tax (VAT) on online selling “will even the playing field with the brick and mortar retailers.”
During his first State of the Nation Address (Sona) on Monday, President Ferdinand Marcos Jr. said the tax system will be adjusted in order to catch up with the rapid development of the digital economy including the imposition of value added tax on digital service providers.
By imposing duties on digital services, the government could generate as much as P11.7 billion in the year 2023 alone, the President said.
For his part, Mandaue Chamber of Commerce and Industry (MCCI) president Kelie Ko said they welcome the plan to improve and adjust the tax system to align with developments in the digital economy and of course to raise much-needed revenues for the economy.
“In broadstrokes, these are welcome initiatives in order to benefit the common good. We support that. However, since many of these reforms are yet to be legislated, there has to be transparency in how Congress will formulate the policies and mechanics. The stakeholders need to be consulted. The devil is always in the details,” he told SunStar Cebu on Wednesday.
MCCI past president Steven Yu also said the tax reforms outlined in Marcos’ Sona is appropriate and effective for the current state of the economy and “acceptable to the super majority of the stakeholders.”
“The evolution of the digital space has to be considered and internalized in the realm of the taxation/taxpayer base,” the business leader said in a separate comment.
“Increasing taxes is not negative per se as long as we know where to target it correctly with profound positive implications to the economy and consuming public,” he further said.
Noting the “plenty of wisdom” in the economic roadmap as outlined in the Sona, Yu noted the business sector’s heightened optimism and confidence level that they “are in good hands” with the current administration.
Marcos asked lawmakers to pass what he called the Internet Transaction Act or E-Commerce Law, which he said aims to regulate commercial activities through the internet or electronic means.
Marcos said this is to “ensure that consumer rights and data privacy are protected, innovation is encouraged, fair advertising practices and competition are promoted, online transactions are secured, intellectual property rights are protected, and product standards and safety are observed.”
Aside from the digital tax, Marcos also pushed two new tax reform packages.
He said the Valuation Reform Bill seeks to establish real property values and valuation standards across the country, and develop a database for this.
Another tax package is the Passive Income and Financial Intermediary Taxation Act, which he said seeks to reform taxes on capital income and financial services.
Marcos is also eyeing to increase the national budget to P7.712 trillion in 2028 from P4.955 trillion in 2022 and P5.086 trillion in 2023 to ensure the continuous implementation of priority programs.
He said his medium-term fiscal strategy “seeks to attain short-term macro fiscal stability while remaining supportive of the country’s economic recovery.”
Echoing the earlier statements of Duterte’s economic managers, Marcos said the economy is seen to grow by 6.5 percent to 7.5 percent in 2022.
The economy expanded by faster-than-anticipated at 8.3 percent in the first quarter as Covid-19 mobility restrictions eased.