SENATE President Juan Ponce Enrile said on Wednesday he was not opposed to the imposition of new taxes as long as these would benefit the people.
Enrile’s statement was made in response to a question on whether he would endorse a reported plan of Malacañang to raise new taxes to help improve social services. He spoke at a breakfast press conference with editors and staff members of the BusinessMirror, the Philippines Graphic and dwIZ held at the BusinessMirror offices in Makati.
He said it was the government’s perfect right to look for legitimate sources of income to fund its programs, and raising taxes was one of them.
But he bewailed the current tax system which, he said, allowed the rich to escape paying higher taxes, while the great mass of people accounted for much of the government’s revenues from value-added tax collections and income-tax payments, among other things.
“I’m not anti-rich,” Enrile said, but noted that the rich, who earn what he called passive income, are not as taxed as the workers who have to give up to 32 percent of their income.
In fact, he said, the rich, who play in the stock market, are taxed at just one-half of 1 percent, a so-called transaction tax.
This should not be the case, he said, noting that many ordinary employees contributed more than the rich who
are levied lower taxes on their passive income, which includes earnings from interests on bank deposits, royalties, dividends and rental, as well as capital gains on sale of real property.
Enrile also pointed out that capital gains tax on the sale of property is only levied 6 percent, while employees pay up to 32 percent income tax.
Usually, tax payment is dependent upon the capacity to pay but in the case of the rich, who resort to enjoying their passive income, their tax payments as a percentage of their earnings do not match.
Under the National Internal Revenue Code, those who have been levied final tax—as in the case of the dividends that listed companies pay to their shareholders—can no longer be taxed again. Tax on dividends amounts to only 10 percent, down from the earlier 20 percent.
Earnings from the stock market are also not included in any investor’s market winnings since these are levied a transaction tax of one-half of 1 percent. This transaction tax is also considered a final tax and, therefore, excluded in an income tax filing.
Interest income from bank deposits and rental income are also considered final taxes and need not be included in a tax filing.
The government has been trying to increase its tax efforts, which lags behind its Asian neighbors. The country’s tax effort, which is the ratio of tax collections over the country’s gross domestic product, has lagged at less than 13 percent against the regional rate of 16 percent.
IN PHOTO -- SENATE President Juan Ponce Enrile (second from left) answers questions at the BUSINESSMIRROR breakfast forum held on Wednesday at the newspaper’s offices in Makati City. In photo are (from left) BUSINESSMIRROR publisher T. Anthony Cabangon, Enrile, ALC Group chairman emeritus Ambassador Antonio L. Cabangon Chua, BUSINESSMIRROR chairman of the board retired Judge Pedro T. Santiago, BUSINESSMIRROR editor in chief Rosauro G. Acosta and senior reporter Butch Fernandez.
