Congress urged to pass 3 tax bills

Finance Secretary Juanita Amatong asked Congress yesterday to pass three of the administration’s eight priority tax bills to enable the government to collect an estimated P60 billion within six months and avert a fiscal crisis.

During a dialogue with Liberal Party leaders, Amatong said the government should prevent the budget deficit from disintegrating into a fiscal crisis through improved tax collection.

"In 2003, our gross domestic product was 4.5 percent, and we can achieve a five percent real GDP growth in year 2004 if we do things in its proper perspective (of a) renewed political mandate and provide President Arroyo a unique opportunity to make a clear break to boost the government’s credibility to investors," she said.

"In 1997, the tax collection effort of the country was 17 percent of the GDP. Now, the tax collection effort of the country is 14.3 percent, so this means that from 1997 to 2004 our tax collection effort has been declining.

"The reason for this tax collection effort decline is first, we were in an economic slump from 1997 to 1999, and maybe up to now. We have low investment and high unemployment rate, we have less GDP production growth. These have been losses in the past five years or so which provided so many exemptions from our taxes."

Amatong said more than 100 laws passed by Congress had contained tax exemptions, which affected government tax collection.

"Tax exemptions resulted in tax leakage which directly and seriously affect our tax collection effort," she said.

"Our tax collection agencies such as Bureau of Internal Revenue and the Bureau of Customs have not collected correct taxes due to inefficiency and corruption. With the declining revenue collection, our expenditures have also been going up due to interest payments (foreign and local debts); personnel expenses of the government and expenditures which we can transfer to the local government units."

Finance Undersecretary Eric Recto has presented to lawmakers the administration’s eight-point legislative agenda, calling for an increase in the value-added tax by two percent in 2006 and in 2007.

The two-step increase in the VAT is intended to raise P19.9 billion in taxes, he added.

Recto said the administration’s second priority legislation is the reimposition of a franchise tax on telecommunications companies.

The target is to collect another P6 billion, he added.

Recto said the DOF has also proposed the adoption of gross income taxation for corporations and self-employed individuals.

The government expects to collect P16.76 billion after offering an amnesty for unpaid taxes, he added. — Jose Rodel Clapano