Recto quizzes exec on ‘sleight of hand’ in tax reform package

Sen. Ralph Recto. INQUIRER FILE PHOTO/GRIG C. MONTEGRANDE

Senate Minority Leader Ralph Recto questioned on Tuesday what he called a “sleight of hand” in the government’s proposed tax reform package.

Recto particularly cited the government’s plan to offset the estimated P180-billion revenue losses from the proposed lowering of income taxes by raising the taxes on some sectors, such as on vehicles.

Finance Undersecretary Karl Kendrick T. Chua told the Senate committee on ways and means that the government would return P180 billion to the people “but this would also be offset by broadening the VAT (value-added-tax) base.”

Chua said expanding the automobile excise tax alone would generate the government some P69 billion to P199 billion. In 2015, he said, the government’s total VAT and excise collections from petroleum products amounted to P52.9 billion.

“Meaning to say, kung P52 billion nakokolekta nyo (If you collect P52 billion), you want an additional 199 billion so from P52 billion, magiging (it will become) P250 billion? That’s a five time increase. That’s what you want?” Recto asked to which the financial answered in the affirmative.

Citing sources, however, the senator said the uncollected taxes from petroleum products were roughly P100 billion.

“So two-thirds is not collected then you want to increase it by P200 billion? And who’s gonna pay for this?” Recto asked.

“Let’s take a look, parang may (it seems there is a) sleight of hand dito e (here). You’re gonna give away P180 billion in individual taxes that you’re already collecting, and you want to collect from the public P377 billion? So the taxpayers pay P197 billion more?” he asked again.

If taxes on vehicles would be raised, Chua said the current price of a Toyota Vios for instance, which is P750,000, would become P871,000 or an additional P121,000.

“Nineteen percent increase is the effect on that car,” he said.

But Recto noted that the problem seemed to be with the government’s failure to collect the right taxes, and raising the taxes would not solve the problem.

“From where we sit Dr. Chua, what we’re seeing is that government is unable to collect the taxes already imposed so there’s a huge gap in what could be collected by the BOC (Bureau of Customs) and the BIR (Bureau of Revenue),” he said.

“Increasing taxes may not necessary be the solution. That’s the point,” the senator added. RAM/rga

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