Middle to low-income earners to be hit by Duterte tax reforms – Lagman

Albay Rep. Edcel Lagman. INQUIRER.net FILE PHOTO/RYAN LEAGOGO

MANILA — Oppositionist Albay Representative Edcel Lagman cautioned the leadership of the supermajority in the House of Representatives against a swift passage of the Duterte administration’s tax reform measure without “enabling provisions” that would cushion the impact of new revenues to the country’s most vulnerable sectors.

“While the low income earners will not benefit from the reduction of the income tax rate because they are already tax-exempt, they will suffer the cascading effects of the increased excise tax on petroleum products as the prices of basic goods and services will become more expensive, including transport and mass housing,” Lagman said in a press statement.

Majority Floor Leader Rodolfo Fariñas last week said the House would like to approve House Bill No. 5636 or the Tax Reform for Acceleration and Inclusion (TRAIN) Act on second reading this week, and on third and final reading next week before the Congress’ recess on June 1.

The comprehensive tax reform program promises to slash income tax returns but also to remove value-added tax (VAT) exemptions. It will also introduce a new excise tax on fuel as well as taxes on sugar and sugar sweetened beverages.

Proponents of the bill like House Ways and Means committee leaders Reps. Dakila Cua and Jose Salceda said TRAIN would include social benefits cards, a conditional cash transfer program, and even an unconditional cash transfer program.

Lagman said “projected cash vouchers for the poor must be well-defined and qualified to benefit the truly marginalized,” and such would have to be specifically provided in the proposed measure and implement through the annual General Appropriations Acts (GAAs).

“There must be a definitive expenditure link between revenues generated and specific percentage earmarking for infrastructure (particularly public transportation), education, health and social protection. A general attribution of revenues to expenditure is not sufficient,” Lagman said.

Lagman also said the bill must have a clear provision that the repeal of the VAT exemptions would not include benefits for senior citizens and persons with disability.

Fariñas had said that congressmen could submit their proposed amendments until noon on Monday (May 22).

On Sunday, Nueva Ecija Rep. Estrellita Suansing proposed a VAT exemption for bottled water “to make it a cheaper and healthier alternative to sugar sweetened beverages (SSB).”

Bayan Muna Rep. Carlos Zarate warned that removing the VAT exemption for rental fees below P10,000 would mean an additional 12 percent to the rental rates paid by house or apartment renters.

Zarate, a militant but administration-allied lawmaker, said that under HB 5636, rent worth P9,000 with an additional 12 percent VAT would make the cost P10,000 a month.

Zarate said this would be burdensome on renters because they would end up saddled with an additional P12,000 a year in rental payments.

Zarate said government statistics showed 1.5 million families renting their homes.

He emphasized that the Duterte administration’s tax reform package would ultimately “hit” the poor and the middle class.

The lawmaker said the additional and bigger taxes would end up negating the lower income tax component of the bill, one of the more attractive features of the measure.  SFM