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MANILA, Philippines After the outgoing Duterte administration vowed tax cuts for the poor and middle class, it now wants to go back on its word and defer tax breaks as well as impose new taxes to pay for the P5.3-trillion debt it contracted but will leave to the next administration when it exits on June 30.
“The Duterte administration used the COVID-19 pandemic as an excuse to borrow trillions for infrastructure projects,” ACT-Teachers Rep. France Castro said in a statement on Sunday.
But “only 0.107 percent of the total borrowings of the government went to the COVID-19 response,” she said.
Castro cited an Ibon Foundation report in September 2021, which said only P570 billion out of P5.3-trillion borrowings were actually spent for COVID-19 response from 2020 to 2021.
She lamented that the Duterte administration inflated the country’s debt, but still could not provide enough funds for aid and services.
More hardship
Earlier, Albay Rep. Edcel Lagman questioned where the incoming Marcos administration will get funds for its “Bayan Bangon Muli” stimulus program when the Duterte administration had already disbursed 90 percent of the 2022 budget although it is still the first half of the year.
Castro said that ordinary Filipinos should not be faulted for the failure of the Duterte administration to properly manage its fiscal position and plan its priority projects.
She said the incoming Marcos administration should disregard the “consolidation” proposal of outgoing Finance Secretary Carlos Dominguez III because it would only cause more hardship to ordinary Filipinos.
She stressed: “The proposed deferment of the scheduled income tax reductions and the repeal of certain tax exemptions will be increasingly punishing to the poor and middle class who have been greatly hit by the economic crisis brought by the pandemic.”
Tax the rich first
“These are the same people, same families that are in need of more aid and assistance from the government,” she added.
“Why are the poor and the middle class the first targets of the government when imposing higher taxes to gain funds for the reduction of government deficits and debt accumulation?” she asked.
“It should first tax the rich and large corporations instead of squeezing the already dried-up pockets of the poor and middle-class Filipinos who have been greatly hit by the pandemic economic crisis,” she added.
In its “fiscal consolidation and resource mobilization plan,” the Department of Finance (DOF) proposed that the incoming administration impose new and higher taxes and defer the personal income tax cuts to start next year.
These tax breaks were provided in the Tax Reform for Acceleration and Inclusion Act, or Republic Act No. 10963, which President Duterte signed into law in 2017.
The DOF also proposed the repeal of exemptions from the value-added tax (VAT) as well as a new VAT on digital services and other new taxes it made no steps to implement during the Duterte administration.
The incoming Marcos administration, which begins on June 30, has made no conclusive comments on which specific proposal, if any, it would undertake.
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