THE government is confident that the revenue loss it would incur from its plan to cut individual and corporate income taxes could be more than offset by the gains from higher excise taxes, and broad-based value-added tax (VAT).
This is the response of Finance Undersecretary Gil Beltran during the budget briefing that the Development Budget Coordination Committee held at the House of Representatives on Monday.
The Department of Finance (DOF) said that the estimated revenue loss of the government from lower income taxes could reach P173.8 billion. The loss that lower tax rate for personal income is estimated at about P139 billion and from lower corporate earnings tax is about P34.8 billion.
These revenue losses, Beltran stressed, are much less than P414.2 billion revenue gains expected from the revenue-generating measures under the government’s tax reform plan.
Revenue gains will stem from the adjustment for inflation the tax on fuel, excise taxes on sweetened beverages like soft drinks as well as fatty foods, rationalization of fiscal incentives, and reducing and rationalizing VAT exemptions.
The estimated gain from higher fuel excise tax is some P178 billion; from VAT base expansion is P164.4 billion; from fiscal incentives rationalization is about P33.8 billion; from excise tax on fatty foods is P20 billion; and from tax on sweetened beverages is about P18 billion.
”The consultations are ongoing so there might be some changes in the figures,” Beltran noted.