Finance Secretary Carlos G. Dominguez III declared yesterday that he was not in favor of the proposals that seek to enhance the Value Added Tax (VAT) that was envisaged for imposition on a number of goods and services.
There is also a heavy support in the Senate to easing the laws for bank secrecy for the purpose of taxation and to the move by Managers of the economic sector who were baying for making tax evasion a crime that is predicate to money laundering; this was disclosed to media men on the sidelines of the celebrations of the 112th Anniversary of BIR by Senate President Aquilino Pimentel III.
While speaking on the subject, the Finance Secretary mentioned that he was opposed to the idea of enhancing VAT by 2% from 12% to 14% to compensate for the promise to reduce the Corporate and Personal Income Tax rates which President Duterte had committed to since they happen to be the highest in the region.
In this regard, Dominguez opined that the enhancement was not needed since some calculations showed that there were options other than just raising the VAT and taxing the citizens; his take on this was that if they just increase the efficiency of the collection machinery, the amount of taxes realized could be at least doubled immediately.
But, the Department of Finance had put forth figures to show that there could be an estimated enhanced collection of P 82 billion by the proposed increase by 2% in the rate of VAT.
Therefore, in the offing is a comprehensive proposal that will present a package of tax reforms in September; the proposed tax reforms will be “revenue-positive”.
Thus, the plan is to get the Senate to put forth and pass a composite package of tax reforms that will be effective from 2018; hence, the concerned authorities have caused the collection of the required data and the supporting groundwork like justifications, explanations etc for Congress to fulfill the promise made by the President.
The making of Tax Evasion as a predicate crime of the act of money laundering as proposed by the DOF to slightly dilute the tough laws on money laundering that are currently in place in the country; surprisingly, where its laws on money laundering do not classify Tax Evasion as a predicate law.
In the matter of having its own bank secrecy laws, the Philippines are one of only three countries that have them.
As per the proposals being prepared under the comprehensive reform package, the taxation on Petroleum products and soft drinks is also likely to be increased; there is also a move to curtail or control the perks that are being extended to the investors till now; this was disclosed by Benjamin Diokna, the Budget Secretary.
The Finance secretary also pointed out that the rates of all oil products had been unadjusted and hence were quite low since a long time even though inflation has been rampant and active; in fact, the Finance Secretary opined that this was the ideal time to set things right and undo the careless dealings of the past which had resulted in Petroleum products being made available at very low rates.
The proposal of the wizards of the Department of Finance was to subject the products on which the positive tax rates are levied on:
- Lubricating oils and greases,
- Turbo Aviation Jet Fuel ,
- Naphtha,
- Premium Gasoline, both leaded and unleaded, and
- Waxes and Petrolatum etc.
The increase in the first year would be only P 10 per liter.
On the other hand the increase of P6-per liter will be imposed by the DOF on the following:
- Bunker Fuel oil,
- Asphalt,
- Kerosene,
- Processed gas,
- Liquefied Petroleum Gas (LPG), and
- Denatured Alcohol that is normally used for automobiles.
These are Diesel and other products that which have been enjoying Tax as per the current rules; there is also a move by the DOF to seek indexation of current excise rates by another 4% annually in spite of the provision that whenever the rates of the crude oil go over $ 90 per barrel, the insertion of government subsidy should be spontaneous.
The report published by Asian Development bank (ADB) also remarked on this vital aspect stating that there was no increase in the pass-through between the producers and the producers did not increase in spite of the recent decline in the global oil rates.
The reason for this might be the energy consumption and policies without corrective actions.
Umrao Singh umraoz.wordpress.com
Written for: Lars-Magnus Carlsson www.thephilippinepride.com?utm_source=rss&utm_medium=rss
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