THE Philippine Chamber of Commerce and Industry (PCCI) said it fully supports the enactment of the tax reform measures aimed at lowering the personal income tax while broadening the tax base by restructuring and increasing tax on consumption.
George Barcelon, PCCI president, said the tax reform package as a whole will have a positive impact on the economy.
“Lowering personal income tax will increase disposable income, spurring savings and consumption, which leads to increased production,” he said. “A virtuous cycle could ensue, where greater consumption and production could lead to a rise in tax collection.”
Barcelon said lower personal and corporate income taxes would be comparable with those in other Southeast Asian count ries.
The Philippines, he said, has the highest tax rates—both nominal and effective—in the Asean region. Asean consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, the Philippines and Vietnam.
“In the interest of fairness, social justice and competition, personal income tax brackets need to be adjusted for inflation at the very least and at once,” Barcelon said.
The PCCI noted the offsetting measures in the tax reform package aim to increase the levy on consumption.
The country’s competitiveness can be bolstered further if spending in public health expenditure, education, social protection and infrastructure are on a par with Asean neighbors, Barcelon added.
He cited that at Philippine spending on social services and infrastructure have been well below its Asean neighbors.
The chamber’s Taxation Committee, co-chaired by Benedicta Du-Baladad and Tammy Lipana, explained that the current tax regime is a burden especially to small and medium enterprises.
Du-Baladad and Lipana said the tax administration needs to be simplified to correct inefficiencies and to make it responsive and supportive of dynamic changes, competitive and empowering of the people and of industries and enterprises.