Finance Secretary Carlos Dominguez presented the proposed tax reform measures of the national government to the Senate Ways and Means Committee. The proposed measures cover five packages that are seen to provide P368.1 billion in revenues over the next few years. File photo

MANILA, Philippines – The Duterte administration is looking at raising P566.4 billion from the proposed tax reforms to finance much-needed infrastructure, nearly three times the expected P198.3 billion foregone taxes arising from revenue eroding measures.

Finance Secretary Carlos Dominguez presented the proposed tax reform measures of the national government to the Senate Ways and Means Committee.

The proposed measures cover five packages that are seen to provide P368.1 billion in revenues over the next few years.

“In the end, this is not simply about revenues and expenditures…This is about building our nation,” Dominguez said.

The first package involves the personal income and consumption tax wherein the Department of Finance (DOF) expects to forego about P159 billion by reducing the maximum tax rate to 25 percent from the current 32 percent over time and at the same time adjust brackets to correct “income creeping.”

The Finance department is also looking at shifting to a modified gross system to simplify the personal income tax system.

To compensate, the Finance department expects to raise P359.7 billion from offsetting measures that include the expansion of the value added tax (VAT) base by limiting the exemptions for senior citizens and persons with disabilities to food, health, and education; adjustment of marginal threshold for low income consumers and businesses; higher excise tax on oil; levy on sugary products; and relaxation of the Bank Secrecy law for fraud cases, and the inclusion of tax evasion as a predicate crime to money laundering.

The government is also expected to forego P34.8 billion from the lowering of the corporate income tax to 25 percent from 30 percent but is seen gaining P33.8 billion from the rationalization of fiscal incentives.

Under the second package, the DOF intends to replace the five percent gross income earned tax rate to a reduced corporate income tax rate of 15 percent and to strictly limit VAT zero-rating to direct exporters. Tax credit certificates will likewise be abolished.

For the third package, the government expects to raise P43.5 billion from the rationalization of valuation of properties, raising valuation closer to market prices. However, it would forego P3.8 billion from the reduction of the estate and donors’ tax as well as the lowering of documentary stamp tax, transfer tax, and registration fees.

The government is also expected to forego another P1 billion from the reduction on interest income earned on peso deposits and investments to 10 percent from 20 percent.

For the last package, the government is set to generate P129.4 billion in additional revenues by revisiting the sin tax imposed on tobacco and alcohol; imposition of luxury tax on motor vehicles, yachts, and jewelry; introduction of carbon tax, fatty food tax as well as lottery and casino tax; and mining taxes.

The Duterte administration wants to increase infrastructure spending to ease congestion in Manila, decrease the cost of moving people and goods through the archipelago, boost tourism, and pump-prime economic activity.

“The next six years can either continue along the path of high economic growth but high socioeconomic inequality, or chart a different path towards shared prosperity that will uplift all,” Dominguez said.

Source: www.philstar.com/business