No new tax hikes, cuts


Aquino torpedoes proposals for new revenue measures

ILOILO CITY: President Benigno Aquino 3rd on Monday stressed that there is still no need to introduce new tax measures.

The President said he is not amenable to proposals to reduce income tax rates as well as increase or expand the coverage of the value-added tax (VAT).

“I’m not convinced as yet. The VAT and the taxes on oil products, duties and tariff … I view that as regressive taxation,” the President, who graduated with a degree in Economics, said.

“Iyong mga tax tulad sa VAT, damay lahat kung ano man ang sitwasyon mo sa buhay, kung ano man ang level ng society. So parang ‘yung VAT at saka ‘yung sa oil, tama lahat, tatamaan lahat, hindi yata ‘yon ‘yung hinahabol ng Saligang Batas na dapat progressive taxation [Taxes like the VAT affects everybody regardless of economic status or level in society. That’s not what the Constitution is saying that we should adopt a policy of progressive taxation],” he added.

Aquino said decreasing income tax rates will lead to lesser government revenues and will only expand tax collection deficit.

The President feared that reducing income tax rates will affect the country’s credit ratings.

“Ang tanong, kapag binawasan natin ‘yung income tax, mababawasan ‘yung revenue, lalaki ‘yung deficit. Iyong paglaki ba ng deficit magiging negative factor kapag ni-rate sa atin o ni-rate tayo nitong mga credit ratings agencies [The question is, if we reduce income taxes, our revenue will also go down and our deficit will grow. Will the increase in deficit become a negative factor when credit rating agencies rate us]?,” he said.

The Department of Finance (DOF) earlier submitted its proposal aimed at easing the burden of income taxpayers while also imposing new or higher taxes on consumption.

The proposal included policy measures that will entail legislation as well as tax administration improvements, which the DOF has claimed would lead to a “competitive, equitable and progressive” tax regime.

The package proposed to raise the tax-exemption cap on income of individuals and small businesses, while also reducing to about 25 percent the corporate income tax ceiling from the 30 percent at present.

But the easing of income taxes is to be compensated for by either increasing the VAT rate to 14-15 percent, from the current 12 percent or further expanding VAT coverage, as well as increasing the excise tax levied on oil products.

Also part of the package is the granting of autonomy to the Bureau of Internal Revenue and the Bureau of Customs from the Salary Standardization Law, so the two revenue-collecting agencies will be able to base the length of tenure and salaries of their employees on their performance.

The President, however, did not like the idea of raising the VAT rate just to compensate for the expected government revenue loss from income tax rate cuts.

Aquino said this will only increase oil prices, transportation fares and power rates.

The President cited that upon his assumption in office, he promised better tax collection so that there would be no need to introduce new taxes.

The Philippines got its first investment grade rating in March 2013 after Fitch Ratings elevated the economy to this status on back of improvement in domestic expansion, fiscal situation, resiliency of the banking system and continued strengthening of external payments position.

In May and December of the same year, Standard & Poor’s (S&P) and Moody’s Investment Service followed suit.

The following year, Fitch and Moody’s upped further their respective ratings on the country.

The only tax measure that the current Aquino administration pushed was the increase in” sin” taxes, which was signed into law in December 2013.

Aquino, however, pointed out that this measure aimed to address the rising number of Filipinos who are affected by smoking-related diseases and to provide additional funding for the government’s health-related programs.

Since its implementation in 2014 it has given the government additional P101.4 billion, which was allocated to the government’s universal health care program.

The President said cutting the rate of existing taxes but increasing VAT does not make any sense.



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  1. victor m. hernandez on

    Indeed, if the tax structure nd system is not broken, why fix it. Better tax collection is the better thing to do. Most of all, that these collections shall redound to the benefits of the nation- more social services. Less leakages, less graft nd corruption. More efficient and effective delivery of services.

  2. to be truthful, it thieves in the government is greatly reduced, then there is no need for income tax reductions! abolish the batasan it is a humongous sink hole of our tax payers money and they have nothing to show for it! damn, they don’t even hold regular sessions anymore as most of them are nowhere to be found!