MANILA, Philippines – The chief economist of the House of Representatives has urged lawmakers to freeze 10 pending tax bills that would further erode government revenues and worsen the financial crisis the nation is facing.
Among the measures that Rodolfo Vicera, head of the House planning and budget office, would like senators and congressmen to “defer action on” are those that would substantially cut electricity cost for consumers.
These are Bill 5210, which seeks to exempt electricity from the 12-percent value added tax (VAT); and Bills 6208 and 6391, which propose to replace the 12-percent VAT on power distributors like Meralco to a three-percent franchise tax.
According to Vicera, the three measures alone would reduce government revenues by P19.5 billion, which is also the amount that would potentially be deducted from the electricity bills of consumers.
Authors of the proposed laws have claimed that their proposals could cut electricity cost by at least P2 per kilowatt-hour.
Another measure that Vicera said Congress should shelve is the proposal to exempt the medicine purchases of senior citizens from the 12-percent VAT.
This would result in revenue losses of about P130 million.
The other measures and their potential revenue losses are those that would exempt the Philippine Gaming and Amusement Corp. from income tax (P5 billion), grant incentives to real estate investments (P5.3 billion), exempt lifeline electric consumers from VAT (P1 billion), scrap the five percent premium tax and remove the documentary stamp tax on life insurance (P2.6 billion), eliminate the 20 percent excise tax on hybrid vehicles (P2.7 billion), and exempt local water districts from paying income tax (P1.2 billion).
Vicera said the 10 bills could reduce annual tax collections and worsen the budget deficit or shortfall by as much as P40.8 billion.
He said Congress has already substantially eroded government revenues by exempting minimum wage workers from income tax and granting incentives for personal equity retirement accounts, tourism-related activities and stock market transactions.
“Taken together, these tax perks would cost the government a total of P57.7 billion in foregone revenues yearly,” he said.
He noted that the Arroyo administration “has so far managed to finance the deficit at a reasonable cost through successful global bond issuances ($1.5 billion, $750 million and $1 billion in January, July and October, respectively).”
Bond issuances are borrowings that form part of the national debt, which, under the Arroyo administration, has doubled to P4.3 trillion.
To prevent the government’s financial situation from further worsening, Vicera recommended that instead of granting additional tax privileges, Congress should revenue enhancement measures.
He suggested that lawmakers simplify the excise tax system on tobacco and alcohol products, which he estimated could bring in P19 billion to P20 billion in the first year of its implementation and P60 billion to P70 billion in its fourth year.
Another bill he wants Congress to pass is the rationalization of fiscal incentives to certain businesses, which “could generate savings of at least P10 billion.”
The government’s worsening financial problem has been blamed on President Arroyo and the House, where, under the Constitution, tax proposals must originate.
“It’s the result of a failure of the collective leadership of the executive and legislative (branches of government),” according to Quezon Rep. Danilo Suarez, a staunch supporter of Mrs. Arroyo.
He said the 14th Congress that is exiting on June 30 next year has failed to approve any measure that would shore up dwindling government revenues. –Jess Diaz (The Philippine Star)
#WearMask #WashHands
#Distancing
#TakePicturesVideos
