2 solons drop support for tax reform package

At least two lawmakers withdrew their support for the first of four packages of the Comprehensive Tax Reform Program supposedly because of its provision on excise and consumption taxes.

“Reforms tied with the restructured income brackets, like the increase in excise taxes and the expansion of VAT (value-added tax) bases, have ironically made the poor pay more,” said Bayan Muna Rep. Carlos Zarate.

Zarate and Alliance of Concerned Teachers Rep. Antonio Tinio withdrew their coauthorship of House Bill (HB) 5636, or the Tax Reform Acceleration and Inclusion bill.

Tinio said he withdrew his coauthorship “in order to enable me to participate in the plenary debates,” suggesting that he would oppose the bill or parts of it.

Zarate and Tinio withdrew their support a day after the Department of Finance (DOF) announced 102 congressmen would back the first of four tax reform packages.

But several other congressmen expressed reservations over some provisions of the bill that links personal income tax cuts with increases in excise and value-added taxes.

Navotas Rep. Toby Tiangco said the cut in personal income taxes would help the middle and lower class but new excise taxes on kerosene, liquefied petroleum gas and diesel would hurt them.

‘First time in history’

“This is probably the first time in the history of our nation that excise tax is sought to be imposed on these three petroleum products, which are mostly used by our poor countrymen,” he said.

Tiangco was among the lawmakers who submitted amendments to Ways and Means committee chair Rep. Dakila Cua after Majority Leader Rodolfo Fariñas set the noon deadline on Monday.

Lawmakers said Fariñas meant to start plenary debates today in order to pass the tax reform package before Congress adjourns on June 2.

But representatives doubted that HB 5636, already a watered-down version of the administration bill and a consolidation of 55 other measures, would pass the House intact.

Stiff opposition

The restructuring of income tax brackets is one of the more attractive provisions, but the excise taxes on fuels and the removal of certain VAT exemptions face stiff opposition.

Zarate said removing VAT exemption for rental rates below P10,000 would mean that the renters would have to pay an additional 12 percent on their rental fees.

Agricultural Sector Alliance of the Philippines Rep. Rico Geron, chair of the House committee on cooperatives development, said he would likely withdraw his support if the prevailing VAT exemption for cooperatives was removed.

“The cooperative sector is contributing a lot to social-economic development especially in the countryside and especially to the poor,” Geron said.

He said the DOF expected P5 billion in taxes from the cooperative sector if the VAT exemption was repealed.

“And they say that one of the reasons for removing the tax privilege of the sector is the tax leakage. But we are saying, why train your guns on the [cooperatives]?” he asked.

“As they say, why burn down the entire rice paddy upon seeing a rat instead of finding the rat and killing it?” Geron added.

Representatives even doubted the feasibility of the DOF-proposed social safety net.

Magdalo Rep. Gary Alejano doubts the social benefits card proposed in the tax reform bill could be implemented efficiently.

Alejano also believes such a social benefits card cannot be insulated from politics, similar to the government’s conditional cash transfer program.

Alejano said the public would also be made to wait before they could enjoy the benefits of the card.

“The government has to collect revenue first, which means the people will have to wait,” Alejano said.