Speaker Feliciano Belmonte Jr. and President Aquino.

Palace, solons in standoff on income-tax reform bill

By Luis Leoncio 

The much-awaited proposed tax cuts may not come about, after all, despite earlier assurances that Malacañang was open to them. 

Latest reports are that the House leadership and the Palace were deadlocked over the income-tax reform bill, with President Aquino indicating he would reject it without a counterpart measure to raise revenues to make up for the losses to be incurred by the government because of the income-tax cuts.

The Palace, through the Department of Finance (DOF), had sought a trade-off for the bill seeking to lower income-tax payments, demanding that Congress pass a bill that would raise the value-added tax (VAT) to 14 percent, which legislators had promptly rejected. With the national elections in less than a year, it would be political suicide for those who would support the Palace-proposed VAT bill.

Nonetheless, Speaker Feliciano Belmonte Jr. and Marikina City Rep. Romero Quimbo said the House would pursue the passage of the tax-reform bill and will continue to seek the President’s backing.

Quimbo had also sought the convening of the Legislative-Executive Development Advisory Council (Ledac) to facilitate the passage of the bill.

Belmonte said the authors of the bill, which seeks to revise the personal and corporate income-tax brackets, were aware of its fiscal implications and have in mind “compensatory measures” that would recover revenue losses due to lower income-tax rates.

“We’re not really changing anything. We’re just giving the applicable earning power of the public when the tax code was approved (in 1997). In other words, inflation is the problem—it’s eating up income and revenues,” the Speaker said.

Sen. Juan Edgardo Angara, who sponsored the income-tax reform bill in the Senate, also urged the President and his finance team to take a stand on the welfare of fixed-income workers.

Angara, chairman of the Senate ways and means committee, said the Senate could work with the House to come up with a modified tax-reduction scheme, as he recommended adjusting tax brackets for salaries to address the impact of inflation on fixed-income workers.

Belmonte criticized the finance department and the Bureau of Internal Revenue (BIR) for rejecting outright the bill without considering the effects of the measure on ordinary Filipinos.

Quimbo said a status quo was not acceptable “because that would mean no change for our overburdened workers.”

He lamented Malacañang’s ignoring calls from legislators for the convening of the Ledac or, at least, calling a “simple dialogue” to resolve differences.

“We really need to sit down and see what the points of agreement and disagreements are,” he said.

Quimbo also said there was a clear anomaly in the tax system, noting that the Philippines has one of the highest income-tax rates in Southeast Asia, but with the lowest collection efficiency.

Leave a Reply

Your email address will not be published. Required fields are marked *