THE Mindanao Business Council Inc (MBCI) backs the comprehensive tax reform plan (CTRP) of the Duterte administration, describing it as the “starting point” to the attainment of the Philippines’s full economic prosperity by 2040, the Department of Finance (DOF) said.
MBCI chair Vicente Lao said that President Rodrigo Duterte’s vision of significantly reducing poverty by 2022 and completely eradicating it 24 years from now “is a dream we share and we will commit to working towards it.”
Lao said the MBCI is one with the Department of Finance (DOF) in making the tax system simpler, fairer and more efficient, which would be achieved by the first package of reforms it had submitted to the Congress last September.
This first package involves reducing personal income tax (PIT) rates, expanding the tax base and adjusting the excise taxes on petroleum products and automobiles, with certain exceptions.
“We believe that the program, comprising several packages beginning with the first package submitted to Congress in September 2016, will simplify and correct the inefficiency and inequity of our tax system. More importantly, we believe that the CTRP is fiscally sound, responsible, and will address the development needs of our country, which are particularly acute in Mindanao,” the MBCI said.
It pointed out that the proposed PIT reductions “is immediately needed and rightfully deserved by the Filipino taxpayer” as “this will provide due relief for the middle and lower-income classes and spur consumption, the effects of which we hope to feel immediately in Mindanao.”
Lao said the Mindanao business community is also backing the DOF’s proposal to broaden the Value Added Tax (VAT) base by reducing unnecessary exemptions and “insidious sources of revenue leakage.”
“Many of our VAT exemptions aim to protect vulnerable sectors, but we are in agreement with the DOF that these sectors must be protected through more targeted and effective means, and not through the tax system, which benefits the rich far more. Most importantly, rationalizing VAT exemptions will improve compliance and contribute to ease of doing business,” the MBCI said.
Keeping in mind the need to exercise fiscal prudence and responsibility in instituting tax policy reforms, the MBCI said it is also supporting the DOF proposal to adjust the excise taxes on automobiles and fuel.
“Studies have shown both excises to be highly progressive and not inflationary, as evidenced by studies of the Bangko Sentral ng Pilipinas (BSP),” it noted.
Finance Secretary Carlos Dominguez III has assured the public that the tax reform plan will not only raise revenues to fund the country’s infrastructure requirements and investments in human capital, but also aims to protect vulnerable sectors, comprising the poorest 50 percent of the population, from the impact of the government’s revenue-enhancing measures.