No use pushing for income tax cut without Aquino support–Belmonte

Speaker Feliciano Belmonte on Tuesday said there was no use pushing for income tax cut in Congress because of the lack of support from President Benigno Aquino III.

In an ambush interview, Belmonte said now that the tax reform measure was out in the public fora, the Congress could take the bills in the 17th Congress.

“All of that is under the table now because unless the President is 100 percent for it, it’s no use taking it in the limited time (we have),” Belmonte said.

“If he’s against it, you better spend time your time on something that will get approved than on something that will not get approved just to prove a point.  The fact that it’s also discussed to a certain extent, it’s there on the record, people will pick it up in the next Congress for sure,” he added.

The bid to lower income tax rate was initially opposed by President Aquino for fears that it might result in revenue loss and dampen credit ratings. He also said the benefits of lower income tax might be offset by an increase in value added tax which might be imposed to make up for losses. Aquino later eased his position but only upon further study by finance officials.

But Aquino had recently branded the income tax cut as a “pogi bill” being espoused by some solons despite its impact in the government revenue stream. Even his anointed one, Liberal Party standard bearer Mar Roxas, said those pushing for lower income tax is only after the “papogi” points from the voters in the middle class who would benefit from the bill.

READ: Tax issue shouldn’t be used to gain ‘pogi’ points, says Roxas

Belmonte said time is not enough for Congress to pass the bill. Congress has at least nine remaining session days left before its Christmas break from Dec. 19, 2015 to Jan. 18, 2016.

Meanwhile, the campaign period for party-list representatives starts on Feb. 9, 2016 and for district representatives on March 25 ahead of the May 9, 2016 elections.

“Time is not on our side. But we want the idea to be developed so that others will pick it up from us,” Belmonte said.

READ: Lowering income tax rate not possible in 16th Congress – Belmonte

He said Congress has successfully passed bills which went through different congresses before it ever saw the light of day.

“We pick up a lot of ideas from previous congresses. Ang daming bills na napasa which have been inherited from previous congresses. This is one of those which we will leave behind for others to pick up,” Belmonte said.

Adjusting to present inflation rates

Congress is pushing for lower income tax rate by adjusting the tax brackets to the present inflation levels.

The present income tax brackets have been pegged on 1997 inflation rates.

Belmonte said Congress had looked at adjusting income tax rates instead of lowering income tax as a more viable measure to update the outdated tax code.

He said finance officials scored the bill as only a “partial reform” because of the need for a “bigger” tax reform.

“The adjustment to inflation is one of the comments, that it’s a very partial reform. (Instead) we should have more time for a bigger reform,” Belmonte said.

The income tax reform bill pending in both chambers of Congress seeks to raise the exemption ceiling to P150,000 a year and lower the rate currently pegged at 32 percent.

The bill will also raise from P500,000 to P10 million the trigger for the higher income tax and reduce the corporate rate from 32 to 25 percent.

Belmonte earlier said income tax cut should not be made an election issue. With Liberal Party standard-bearer Mar Roxas saying more studies were needed before the tax reform measure could be implemented, other presidential bets claimed they backed lowering income tax.

READ: 4 presidentiables on FOI, Cha-cha, corruption, tax reform

‘There is still sufficient time’

For his part, Bayan Muna Rep. Neri Colmenares insists that there is still time to pass the controversial measure.

He scored his colleagues for being dictated by the president’s whims instead of listening to their constituents.

“There is still sufficient time for the passage of the lower income tax bill. We have sessions till Dec. 15. I think that the technical working group report was already scheduled to be reported out of the Ways and Means committee, so if the House leadership wants to pass it then it can easily be tackled and passed by the plenary in December,” said Colmenares, a senatorial candidate under the ticket of Senator Grace Poe.

“We as representatives of the people should not be hindered by the view of Pres. Aquino and instead listen to the demands of our constituents. The executive is a co-equal branch of Congress. It has no power to order us what to pass and not to pass,” the militant lawmaker added.

Clash in opinion

Belmonte earlier bared a clash in opinion between lawmakers and finance officials during a Nov. 9 meeting with Pres. Aquino over the income tax cut proposal.

READ: Lawmakers, finance officials clash over push for lower income tax, says Belmonte

Belmonte said he and Senate President Franklin Drilon gave a “vigorous presentation” in pushing for tax bracket adjustment, but Finance Secretary Cesar Purisima supposedly recommended not to look at the measure as a “piecemeal” legislation and instead look at evaluating the entire tax scheme.

“In brief, we made our pitch for it, we made a vigorous presentation. In some cases, kinontra ng kaunti ni Purisima, saying we should not be doing a piecemeal thing. We should address the whole issue of income tax scheme and so forth,” Belmonte said.

Belmonte said he and Drilon were “vehement” in their position to push for tax brackets adjustment.

“Their claim is that the entire tax code should be looked up. Kami naman, let’s start with updating it. The values of the brackets are based on 1997 values, whereas nagbago na ito after 17 years,” Belmonte said.

“Mahaba din ang discussion namin because Frank (Drilon) and I were very vehement. After listening to all four of us, sabi ni Presidente, ‘You’ve made your point,” so they went on their own conversations,” Belmonte added.

Congress resorted in shifting its move to adjust bracket levels after the Tax Management Association of the Philippines (TMAP) urged House leaders to adjust levels of taxable income to inflation.

The TMAP has called for the passage of an income tax bill which provides for the indexing of tax brackets to inflation and a mechanism for its automatic indexation.

The present tax code sets a 32 percent rate for individuals with an annual taxable income of more than P500,000.

READ: 18 business, labor groups push tax reform

The legislature is eyeing to lower income tax rate just after President Benigno Aquino III signed the law increasing the tax exemption cap on bonuses to P82,000 from P30,000.

READ: Higher tax exemption cap on bonuses now a law

In pushing for income tax reform in the lower chamber, ways and means chair and Marikina Rep. Miro Quimbo had warned of a “bracket creep” phenomenon wherein workers’ salaries increase according to inflation while tax brackets remain unadjusted since 1997, when the tax code was passed.

READ: Ordinary workers pay bulk of income tax collection, says lawmaker

He said at least 16 percent of total individual income earners pay for 85 percent of total individual income tax collection in 2013.

Meanwhile, 72 percent of all income taxes are paid by the middle class while the highest income earners shoulder a smaller portion of tax payments, Quimbo added.