JCM: Vice presidential and Presidential bets’ stance on income tax system

Thursday, April 14, 2016

Vice presidential and Presidential bets’ stance on income tax system

Over-taxation is among the burdens that the government passes on to the middle class in favor of its desire to generate funds to sustain its subsistence, while its citizenry suffers from its consequences on daily meals in exchange of enormous amount that lawmakers could deposit in their individual pockets, then attach their individual names with HONORABLE CONGRESSMAN/HONORABLE SENATOR while enjoying hocus-pocusing the taxes that the people sacrificed.

All of the six vying for the vice presidential seat support the reduction of the country's decades-old income tax brackets believing that government revenues will not shrink drastically due to tax cuts. Here is their individual impression on income tax system:[1]

Chiz Escudero

The vice president candidate criticize the government for underspending, looking at the government’s position that tax cuts would lessen funding for government services as a "myth."

Lowering of income taxes broadens the tax base, increases the purchasing power of the people and it increases consumption, thus stimulating production and producing more jobs, he says.

Ferdinand “Bong Bong” Marcos

In a student forum in San Fernando, La Union last September 2015, he criticized the government: “What’s the rationale behind collecting too much tax when the government doesn’t know when and where to spend it?”

According to the Senate committee on finance, the government has underspent by about P623 billion since 2011, which is 20 times higher than the pegged P30 billion-loss in annual revenue stated by the Department of Finance should tax cuts be put into practice.

Budget Secretary Florencio Abad said in a forum with journalists last June 2015 that the “institutional weaknesses” of government agencies, along with more rigid requirements prior to fund release is the reason for the recurrent problem of government underspending.

Government underspending in 2011 decelerated economic growth to 3.7% that year, from 7.6% in 2010. It bounced back to 6.6% in 2012, as the government improved spending, aided by the Disbursement Acceleration Program (DAP) implemented in the third quarter of 2011. The Supreme Court, however, ruled in 2014 that such executive actions is unconstitutional.

Gringo Honasan

Tax cut is "doable" as long as government's priorities are very clear, he says.

Alan Peter Cayetano

Expressed his full support for the proposal.

Sonny Trillanes

While he is for income tax cuts, this may trigger the need to increase other taxes, he says.

Leni Robredo

She supports the tax reform despite the lukewarm support of the Aquino administration for the proposed income tax cuts. Malacañang had said that there is no discussion on the need for tax reforms but proposals to reduce tax rates need to be broadly examined taking into accounts its potential consequence on government programs.

On the other hand, the presidential candidates also manifest their supports on tax reforms. Senators Grace Poe and Miriam Defensor Santiago, Vice President Jejomar Binay, and Davao City Mayor Rodrigo Duterte have their own tax reform proposals which differ from bracket reclassification to exemption, as detailed below:

Presidential Candidates’ Proposition on Income Tax
Jejomar Binay	Yes	Tax exemptions for remunerated employees P30,000 and below
Rodrigo Duterte	Yes	Tax exemptions for wage earners P20,000 and below
Grace Poe	Yes	Reclassification of tax brackets
Manuel Roxas II	Yes	Open to cut income tax rates but talks should be made not within election season
Miriam Defensor Santiago	Yes	Overhauling of tax system within 6 months of administration

In September 2015, Malacanang turned down the proposal to reduce income tax rates, being the "lifeblood of the economy" as they call it, unless there is a corresponding measure to offset the loss. In the same month, the country’s business groups also appealed for the Aquino administration to reform taxes to be fair and competitive with ASEAN neighbors, as presented below:

A number of economists said that the 19-year-old personal and corporate income tax system of the Philippines are the "most unattractive and outdated" in the Association of Southeast Asian Nations (ASEAN).

The Philippines has the second highest personal (32%) and highest corporate (30%) income tax systems among the ASEAN 6, or the major economies in the ASEAN, which also includes Indonesia, Malaysia, Singapore, Thailand, and Vietnam.

Based on 2015 IBON Foundation report, around I5 to 6 million Filipinos and their families are doubly saddled by higher taxes and inflation. Prices of products and services have doubled or increased by 110% between 1997 and 2012, but the individual income tax brackets have remained unmoved since 1997. The report also mentioned the latest Family Income and Expenditure Survey (FIES) disclosing that the income of the lowest-earning 70% of Filipinos had intensified by 137% between 1992 and 2012. Thus, many low and middle income families now have to pay higher taxes.