Budget Secretary Benjamin Diokno. PRESIDENTIAL PHOTOGRAPHERS / TOTO LOZANO
Budget Secretary Benjamin Diokno on Wednesday thumbed down senator’s proposals to lower the Value Added Tax (VAT), saying it’s a “very populist” policy.
Diokno was asked to comment on the some lawmakers’ push to amend the tax code and lower the VAT to help the poor cope with the rising prices of goods and services amid ballooning inflation rate and the implementation of the Tax Reform for Acceleration and Inclusion (Train) Law.
“I don’t think this is the time for that because we are in a taxing up move to protect our full major investment which is investment in infrastructure. It’s very important that we invest in our people,” he said at the Kapihan sa Manila Bay forum. “We have to develop them into a competent and flexible workforce.”
“Let’s not be populist,” he added.
Senators are proposing to lower the VAT from the current 12% to just 10% in the second package of the Duterte administration’s tax reform program.
Senate President Vicente “Tito” Sotto III eyed the lowering of VAT as a possible counter measure to rocketing inflation.
READ: Senate eyes reduction of 12% VAT to 10
https://newsinfo.inquirer.net/999416/senate-eyes-reduction-of-12-vat-to-10
But Diokno explained that the Philippines has already one of the lowest VAT in the world, citing China’s VAT at 17 percent.
“VAT is the best tax system in the world. It’s practiced by maybe 99 percent countries of the world,” he said.
The budget chief cautioned lawmakers from making policy changes based on a temporary climate of the economy.
“The high inflation right now, as we explain, is transitory. It will taper off and normalize next year. You cannot decide on tax system on the basis of a transitory event. We need to raise our taxes to finance our needs,” he said.
He added: “We spend it so dapat ang tingin mo ay tax and expenditure. Are you a net beneficiary? Ang tawag doon ay net incidence. Magkano ba ang binabayad na buwis ng mahihirap? How much benefit do they derive? That’s how you should see it.” /cbb