There would be no increase in value-added tax (VAT) when the income tax reform bill is passed into law during his administration, Vice President Jejomar Binay vowed on Wednesday.
Binay is the standard-bearer of the United Nationalist Alliance in next year’s elections.
“We will ensure that VAT will remain as it is so our people could buy more from their income,” he said.
“The point of reducing the income tax would be meaningless if prices of our commodities would skyrocket because of increased VAT,” the Vice President added.
He noted that 11 million Filipino families are poor.
Binay allayed fears that slashing income taxes would result in revenue loss for the government.
“Raising VAT is not the only way to compensate for the revenue loss. We already have a
menu of options to compensate for the potential revenue losses from reducing tax rates,” he said.
These options, according to Binay, include sale of government assets and privatization of a number of government-owned and—controlled corporations (GOCCs); approval of revenue-generating measures, including fiscal incentives rationalization; fuel marking to fight oil smuggling; and continued improvement in tax administration and collection efficiency.
Should he be elected President, he said, he would convene the Legislative-Executive Development Advisory Council (Ledac) within the 100 days of his administration for swift passage of the tax reform bill.
“If given the opportunity to serve our fellow Filipinos, I will certify the tax reform bill as urgent after a thorough consultation with the Ledac,” Binay added.
“We are pushing for a comprehensive tax system reform that will gradually reduce the personal and corporate income tax rates in the Philippines to a level that is more consistent with our peers in Asean [Association of Southeast Asian Nations],” he said.
Binay cited advantages of passing a tax reform bill, saying it would result, for one, in improved tax collection and compliance.
“With the current taxation system, up to 85 percent of the total collection of individual income taxes is paid by the working class while only 15 percent comes from self-employed individuals and professionals,” he said.
“Tax reform would result in the improved competitiveness of Philippine corporations and their workforce. It will also encourage more foreign investments, resulting in more jobs for our people, and more revenues for the government,” the Vice President added.
Binay said tax reform would also lead to increased consumer spending, allowing the government to recover some of the short-term revenue loss.
The Vice President expressed his disappointment with some government officials and candidates for dismissing the tax reform bill as a “pogi bill,” designed only to attract votes from the middle class.
“It is unfortunate that this issue is being politicized. The tax reform measure will benefit individual households, society and the economy at large,” he said.
“Tax savings will help Filipino families afford a house, therefore [fewer]informal settlers; an education plan for their children, causing [fewer]drop-outs in schools; and a retirement plan that will have [fewer]senior citizens dependent on charity or the government,” the Vice President added.
“Our tax system must be seen as fair. Those with bigger paychecks ought to pay higher taxes than those who earn less, and inflation-adjusted tax bracket is only just,” Binay said.