Palace rejects 'piecemeal' income tax cuts anew

MANILA, Philippines - Malacañang maintained on Tuesday that the Aquino administration is after a "holistic" tax reform program amid mounting calls for the lowering of income tax rates.

Communications Secretary Herminio Coloma Jr. said holistic tax reform and accelerated infrastructure development will sustain a high economic growth trajectory that will enable the Philippines to join the ranks of high income countries.

"The government believes that instead of piecemeal changes in the tax rates, a holistic tax reform program is needed to ensure the continued implementation of essential programs on social protection, poverty alleviation, employment generation, educational competitiveness, housing, universal health care, as well as for public infrastructure and national defense and security," Coloma said in a press briefing.

Last month, President Aquino rejected legislative measures aimed at lowering the prevailing income tax rates, saying these will not help the economy and the people.

Aquino said income tax cuts will decrease government revenues and expand tax collection deficit. He said these scenarios will affect the country's credit ratings.

But a week after Aquino's remarks, Finance Secretary Cesar Purisima expressed openness to changes in prevailing tax rates.

"We are open to a holistic reform which will include an adjustment of the rates and brackets," Purisima said in a statement.

"Doing otherwise is not the fiscally responsible way since it can hurt our people [in the] long run if we go down the slippery slope of populist policies," he added.