Tax reforms to be proposed to DBCC

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Tax measures that could boost government revenues will be on the agenda as the inter-agency Development Budget Coordination Committee (DBCC) meets today, a National Economic and Development Authority (NEDA) official said.

NEDA Assistant Director General Rosemarie Edillion told reporters last week that the DBCC’s Technical Working Group (TWG) would be presenting revenue measures using two scenarios.

“One scenario will be the one where there’s already the impact of legislative measures—meaning your comprehensive tax reform package—and another one where there will be none,” she said.

The Finance department last year asked President Benigno Aquino 3rd to endorse a tax reform package that sought to ease the burden on taxpayers by reducing both the individual as well as corporate income tax rate.


Aquino, however, was said to have rejected the proposal on account of revenue losses that the Finance department wanted compensated for via a higher value-added tax (VAT) rate.

The VAT would have been raised from 12 percent to 14 percent and its coverage expanded by removing all exclusions except those for agriculture, health, banks and education. The Finance department also wanted to remove zero-rating, except for direct exports.

Also included was a proposal repealing bank secrecy provisions for the Bureau of Internal Revenue and making tax evasion a predicate crime.

“We really need tax reform to improve efficiency and to improve equity. It is not just the new taxes; one is really to improve the horizontal equity of the tax,” Edillion said.

The NEDA official said the TWG would also be recommending other revenue-generating measures such as an increase in fuel excise taxes.

“It is the right time to do it because the prices of fuel are going down, and of course when prices are going down, the demand will increase,” she said.

“That (higher demand) is bad for the environment and bad for the traffic as well … So you can only regulate it through the tax system,” she added.

Other sources of revenues that the TWG is looking at include a higher tax on sweetened and carbonated drinks as proposed by the Finance department.

The government is backing a bill pending in the House of Representatives that seeks to impose an additional tax on soft drinks.

House Bill 3365, authored by Representative Estrellita Suansing of Nueva Ecija, proposes a 10-percent ad valorem tax on soft drinks and other carbonated beverages.

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