Following the strong position of the Palace against the tax-reform proposals, Speaker Feliciano Belmonte Jr. on Tuesday said even the measure seeking to adjust the levels of taxable income to inflation is now considered dead in the House of Representatives.
Belmonte, in an interview with reporters, said the measure can no longer be passed by the House in the 16th Congress due to lack of time.
The leadership of the 16th Congress was pushing for the said proposal as a compromise to the measure lowering income and corporate tax rates, which was also strongly opposed by the Palace.
“There’s no time for a real big tax reform which is needed, because adjusting the levels of taxable income to inflation is a very partial reform; we should have more time for bigger reform,” he said. “You better spend your time on something that will get approved rather than what will not be approved. Our time better spent on other things that are doable, desirable.”
Based on the legislative calendar, Congress will adjourn on December 19 and resume on January 19, 2016. The third and last regular session of the 16th Congress is expected to be cut short, because of the 2016 national and local elections in May.
President Aquino, taking the cue from the Department of Finance (DOF) and the Bureau of Internal Revenue, has repeatedly rejected the passage in Congress of a long-pending bill mandating adjustments in individual and corporate income-tax rates, saying that the government “cannot put our fiscal sustainability and credit rating at risk by doing piecemeal revenue-reducing legislation.”
The DOF has said the proposal may cause the government to lose revenues totaling as much as 1.5 percent of the country’s GDP, or P30 billion.
President Aquino said he is still not backing income-tax reforms, until there is no compensating revenue measure on the table.
The President also asked the proponents of the tax-reform proposals to first seek solid sources of funds to fill in the projected fiscal gap from foregone revenue seen to ensue from proposed adjustments.
He also asked Congress leaders to first find a “balance” that would offset the P30-billion revenue loss from the proposed tax-reform measure, which the next administration could reverse by raising taxes anew.