Government keeps VAT break for seniors, disabled

The Duterte administration has as­sured that there will be no change in the value-added tax (VAT) ex­emption for senior citizens and persons with disabilities (PWDs).

Department of Finance (DoF) Under­secretary Karl Kendrick Chua announced the good news in a press briefing in Mala­cañan on Friday.

“The good news is that senior citizens’ VAT exemption and those for PWD will not be removed but we will have to finetune the system. For example through a national ID so that leakage is prevented and that the public will really enjoy its benefits,” Chua said.

Chua explained that the tax reform measures aim to decrease the poverty rate from 22 percent to 14 percent and make the Philippines a middle-income country by 2022.

He said the tax reform package is part of President Duterte’s 10-point socioeco­nomic agenda.

“He promised tax reform, lower taxes but he also promised eight other priorities which needed funding. As a result, we con­sidered to fix the income and other tax sys­tem,” Chua said.

“We wanted a simpler, fairer, and more efficient tax system to help our country progress,” he added.

Chua said that while some sectors consider the tax reform measures as a burden, Filipi­nos should instead look at it as a package.

“The reforms should not involve only oil, or automobile. It should be looked at as a package since for majority of Filipinos, the lowering of personal income tax will improve their welfare or income,” Chua said.

“If we can use more tax revenues for the poor, that would help uplift more Fil­ipinos so we earmarked revenues only to infrastructure, education, health and social protection. In our view, there is no reason for the government to fail in providing solution to poverty so that we can hope for the next generation to see a more prosper­ous country,” he said.

Finance Secretary Carlos Dominguez III also raised the importance of getting law­makers’ approval on the proposed Com­prehensive Tax Reform Program (CTRP) to ensure sustained growth of the economy.

Dominguez said the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) have put in place several reforms within the first six months of the Duterte administration that can be implemented even without Congress’ approval.

These programs include expanding the Large Taxpayers Service (LTS) list to top 3,000 corporations, which provide 75 per­cent of total tax revenues, from the previ­ous top 2,800 corporations; simplification of forms and procedures for small taxpay­ers, improvement of the electronic payment system, and enforcing risk-based audits in the BIR.

For BOC, it is now complementing the implementing rules and regulations (IRR) of the Customs Modernization and Tariff Act (CMTA) and is upgrading its electronic system for paperless transaction.

Dominguez said these reforms are needed “but these alone will not be suffi­cient to generate the high level of revenues needed for the infrastructure buildup and other priority programs to keep the growth momentum and transform the economy into a truly inclusive one.”

”This is why tax policy reforms are needed,” he stressed.

Thus, Dominguez is thankful to Quiri­no Lone District Rep. and House ways and means committee chair Dakila Carlo Cua, who recently disclosed that his commit­tee will likely pass within this January the first package of the Finance department’s proposed Comprehensive Tax Reform Program (CTRP), which was submitted to Congress in September 2016.

The first package of the CTRP propos­es the increase of excise tax on fuel prod­ucts and vehicles. Its negative impact to the poor was proposed to be countered by tar­geted cash transfer, among others.

Finance Undersecretary Karl Chua, in a briefing with the House of Representatives ways and means committee on Wednesday, said there is a need to adjust excise tax on fuel because this has not been adjusted for the last 20 years.

He, however, stressed that to offset the impact of the fuel excise tax hike on the poor, the government plans to implement a one-year cash transfer to the bottom 50 percent of the population, which covers 10 million households, four million of which are already beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps).

The Duterte government targets to increase infrastructure spending from 5.4 percent this 2017, to seven percent in the rest of the current administration’s term or until 2022, to lessen poverty and en­able the country to be an upper middle in­come economy by 2022 and a high-income economy by 2014.

”This means there will be no letup in the Duterte administration’s commitment to spending on urban and rural infrastruc­ture as a growth driver, to guarantee sus­tained high and inclusive growth,” Domin­guez added.