Outgoing Speaker Feliciano Belmonte, Jr. has decried a proposal to increase the Value Added Tax (VAT) rate from 12 percent to 15 percent, calling it a “lazy” idea.
Belmonte was responding to the plan of incoming Budget chief Benjamin Diokno of raising the VAT rate from 12 percent to 15 percent after two years to offset government revenue loss from reduced income tax rates that had been proposed.
“I would not support it on its own because VAT is paid by everybody, including the poor. They [Duterte administration] should think of other things. The incoming Budget secretary is a veteran, and they could only think of raising VAT?” he said.
Diokno also served as Budget chief during the Estrada administration.
“I could have thought of that, albeit easily. They should use their imagination and expertise in order to make those making much money pay more,” Belmonte said.
He was referring to a pending measure that aims to reduce income tax rates by providing a new bracket exempting those earning P180,000 and below annually from paying taxes, while those who annually earn above P180,000 to P500,000 would have to pay nine percent.
Individuals whose yearly income is above P500,000 to P10 million, on the other hand, will pay 17 percent.
The proposed measure mandates those with more than P10 million annual income to pay 30 percent.
“A lot of people already can’t afford the current VAT rate. Yes, our economy is growing, but the challenge for every administration is to translate that growth that will be beneficial for the poor. And to me, that challenge remains for the next administration,” Belmonte said.
“There must be something else that should be done. Our tax system needs overhauling, not an easy way out,” Belmonte added in closing.
Ifugao Rep. Teddy Baguilat and Akbayan party-list Rep. Ibarra Gutierrez also warned earlier that increased VAT would mean a higher number of poor people.
“The VAT would cover essential goods, so even those who normally are not income taxpayers, the non-fixed low income citizens or those exempted by law,will be having a more difficult life,” Baguilat pointed out.
“Raising the VAT to 15 percent is unfair for the 16 million people who voted for him [Duterte]. These 16 million people are expecting better lives in voting for him. As far as I can remember, candidates were always talking [about]not increasing taxes. It’s sad that such promise has been forgotten this early,” Gutierrez, a lawyer, said.