LP: Binay’s tax exemption promise will lead to ruin

The Liberal Party (LP) on Wednesday warned that Vice President Jejomar Binay’s campaign promise of broadening tax exemptions would lead the country to financial ruin.

Marikina Rep. Romero Quimbo, LP coalition spokesperson, said Binay’s proposal to expand personal tax exemptions to cover individuals earning P30,000 or less a month, which the Vice President announced during the launch of his presidential campaign in Mandaluyong City on Tuesday, would cut the government’s tax revenues by half.

Quimbo, the chair of the House ways and means committee, said only 7.8 million of the 34 million workers in the country pay taxes and a sweeping increase in exemptions would further reduce government tax revenues.

“Binay’s proposal would exempt up to 6.66 million workers or 85 percent of the actual tax base, leaving only 15 percent of 1.15 million who will carry the tax load for the entire country,” Quimbo said in an interview.

“Who will continue paying income taxes? His proposal could result in a revenue loss of P113.4 billion or almost 50 percent of the total tax revenues. Where will the government get funds to [finance] health and school-building programs? This will shut down the CCT (conditional cash transfer)  program, among other [things],” he said.

But Navotas Rep. Toby Tiangco, president of the opposition United Nationalist Alliance, said Quimbo inflated his figures.

“Our economic advisers told us that raising the tax-exempt level to those earning P30,000 a month and below would only result in a P30-billion forgone revenue from income taxes. This can be sufficiently covered by a crackdown on smuggling, which is costing the country P270 billion in [lost] revenue,” Tiangco said.

Quimbo said the administration was well aware that the Philippines has a very high tax base but its economic managers were responsible enough not to do anything drastic considering that it has to make do with a shallow tax base.

Quimbo said LP presidential candidate Mar Roxas was the only lawmaker who successfully shepherded a tax-exemption bill.

Roxas was the author Senate Bill No. 103, filed in 2007, which amended the Tax Reform Act of 1997 to exempt minimum wage earners  from paying income taxes.

The minimum wage in Metropolitan Manila is pegged at P9,720 a month. Gil Cabacungan

RELATED VIDEO