Department of Finance (DOF) is open to a regime of fixed taxation in the country but claims that it requires a special provision through Charter Change.
Asked about the possibility having such a system in the country, Finance Secretary Carlos Dominguez 3rd noted the 1987 Constitution does not allow fixed taxation.
“Our constitution mandates a progressive tax system, which means … pay in accordance to your ability to pay, basically on what you earn” he said in a chance interview.
A fixed tax is a lump sum that is not measured as a percentage of the tax base—income, wealth, or consumption. Fixed taxes, like poll tax or sin tax, are often considered regressive but could have progressive effects if applied to luxury goods and services.
“I know fixed taxation, like in Hong Kong, is very effective. But our Constitution mandates again something like this” the Cabinet official said.
However, Dominguez noted having such a tax system is not impossible especially now that the Philippines is going to have a constitutional change.
“I will suggest that people really think about a provision that will allow something like this,” he said.
Fixed taxation will certainly make life a lot easier for the people, for the tax authorities, and may reduce the corruption.
“If u want to change it, then lets discuss it through Con-Ass [Constituent Assembly],” he said.
The Duterte administration is pushing for a quick Charter change through a Constituent Assembly that will promote federalism as the form of government.
Under Article XVII, Section 1 of the 1987 Constitution, amendments to the Charter may be proposed by Congress “upon a vote of three-fourths of all its Members.”