Think tank urges gov’t to plug tax collection loopholes first

MANILA, Philippines — A local think tank has urged government to justify new or increased taxes particularly those with inflationary effects.

During an economic forum Wednesday, Dindo Manhit, president of policy research body Stratbase ADR Institute, said the government must first plug loopholes in collection before legislating more tax measures.

“With regard to the government’s tax reform program, the administration must work double time to justify the increase in taxes or the imposition of new taxes, especially those with inflationary effects to consumer goods, before embarking on legislating more tax measures,” he said.

“Legislating new tax measures is easier than plugging loopholes in the system and reforming the culture of corruption in tax collection agencies. It took 20 years for the tax system to be upgraded, but it might take a longer period to muster the political will to make the entire government more accountable and transparent,” he said.

Congress passed last year the first package of the comprehensive tax reform program which reduces personal income taxes, with revenue losses offset by excise taxes on sugary beverages, cigarettes and fuel.

Revenues from the first package will help fund the administration’s ambitious infrastructure program and investments in social protection and human capital development.

But due to persistent rise in inflation, however, the government is considering to suspend the next hike in fuel excise tax scheduled to be implemented in January 2019.

Currently being deliberated on in Congress is the second package of the tax reform program which seeks to lower corporate income tax.

To offset revenue loses from this, it is proposed that fiscal incentives enjoyed by some firms be rationalized as some of these incentives were given perpetually and have created disparities between similar businesses.