The leadership of the House of Representatives remains unreceptive to the proposal imposing excise tax on petroleum products.
Speaker Pantaleon D. Alvarez, in a radio interview, said the Bureau of Internal Revenue (BIR) should improve its tax-collection efficiency measures to cover up for the foregone revenues from the plan lowering personal income tax rates.
“The VAT [value-added tax] collection rate is more or less at 4.3 percent, which is very low. It did not even reach half of our 12-percent target. Now if we look at the figures revealing the insufficient means of tax collection, why should we impose taxes on several items just to cover up the inefficiencies of the BIR on tax collection?” Alvarez said.
Last month the House Ways and Means Committee approved a bill seeking to raise the government’s VAT collections by mandating the creation of an electronic data information interconnectivity between the BIR and the country’s businesses using cash-register machines (CRM) and/or point-of-sales (POS) machines.
PDP-Laban Rep. Dakila Carlo E. Cua of Quirino, committee chairman and author of the approved House Bill 4601, said it is the tax administration system that should be improved if the government wants to collect more revenues.
“Tax administration is the heart of taxation. However, given the country’s tax laws as to what and how much to be taxed, it is still the system of tax collection which is the be -all and end- all of every government’s fiscal standing,” Cua said.
“If enacted into law, the measure will greatly help in the early detection of misdeclaration done by unscrupulous taxpayers, thereby reducing or removing errors in the reporting of sales and purchases. Mandating interconnection between the BIR and appropriate government agencies will provide the BIR with third-party information, easier VAT refund mechanism and data collection, all of which could be used in plugging leakages and overall efficiency of tax administration. This will also put our country on a par with other countries already using interconnectivity between the tax authority and businesses,” Cua said.
Moreover, Alvarez said, he already instructed the Ways and Means Committee to carefully study the Department of Finance’s (DOF) tax-reform package, especially the tax on petroleum products that will only affect the poor sector.
The imposition of excise tax on petroleum, removal of VAT exemptions for senior citizens and person with disabilities and ad valorem tax on automobiles are among the offsetting measures being pushed by the DOF in their first proposed Comprehensive Tax Reform Package, which lawmakers opposed.
The Comprehensive Tax Reform Package seeks to lower personal income tax rates and impose additional taxes on certain commodities.
The tax-reform package involves foregone revenue of around P200 billion but, at the same time, will generate around P566 billion for the government due to these new additional taxes.
‘Band-Aid solution’
Meanwhile, Party-list Rep. Ariel Casilao of Anakpawis urged the Duterte administration not to push with the proposal of his economic managers to impose its tax-reform measures, particularly on raising the excise tax on oil products, but instead run after tax evaders, improve tax collection or impose higher taxes on the richest elite in the country such as those tagged by Forbes magazine as the 50 richest.
Casilao also said that, instead of conscientiously running after tax evaders who are usually from the business sector, these economic managers prefer a Band-Aid solution that stretches to being undemocratic and burdensome to the majority of the population.
Casilao added that oil products are volatile commodity due to the monopoly of a few oil companies who “cartelize” its prices as tolerated by the existing law deregulating the oil industry, saying oil-price hikes trigger a pandemonium effect—from transportation costs, prices of basic goods, utilities and services—that would automatically affect the poor sectors.
“The government tax agencies should shape up and carry out reforms in getting their collectibles, such as the staggering losses of the BIR at P400 billion and Customs at P200 billion in 2012, as announced by the finance department,” Casilao said.