Outgoing President Benigno “Noy” Aquino III has reportedly “scolded” his allies in the 16th Congress who are pushing populist tax relief bill. The word “scolded” is perhaps too strong since Congress is a co-equal branch of the government. But the presidential sentiment has reportedly been echoed to close allies in Congress through stern words sent via SMS.
Giving some form of tax relief is definitely a vote-getting measure for lawmakers, especially those up for election to higher office, or for re-election of many incumbent members of Congress. With the next national and local elections in May 2016 just around the corner, taking up the cudgels to ease the burden of taxpayers is a sure way to be noticed by voters looking for the best candidates to support.
Certainly, President Aquino – who himself once served for three terms as Tarlac congressman and three years as senator – knows very well the dynamics in Congress. We could only imagine how President Aquino is losing more hair at this stage of his administration because of the latest antics by his allies in Congress.
The tax reform bill belatedly pushed by lawmakers would come across as more sincere if the proposed legislation was started early on. But like President Aquino, the term of office of the 16th Congress is also winding down.
On its third and last regular session, the 16th Congress will have its first recess this year on October 10 and resume on November 3. Incidentally, the congressional break coincides with the filing of certificates of candidacy at the Commission on Elections for those running in next year’s elections.
The next adjournment of Congress would be for the Christmas recess from December 19 to January 18. The lawmakers would barely have a month of session days when they resume on Jan. 19 and adjourn again on Feb. 5 when they start their respective campaigns for the elections.
The remaining session days in both the Senate and the House of Representatives are already divided over a full plate of priority legislative bills, foremost of which are the proposed 2016 budget bill and the controversial Bangsamoro Basic Law (BBL).
But Sen. Juan Edgardo Angara and Marikina Rep. Miro Quimbo, the chairman of the Senate and House committees on ways and means, respectively, are both adamant they could still squeeze in the proposed tax reform bill in their tight calendar.
Angara, who belongs to the Laban ng Demokratikong Pilipino (LDP), is a first term senator and is not running for any higher public office. On the other hand, Quimbo who belongs to P-Noy’s Liberal Party is reportedly eyeing to run next year for mayor of Marikina. That is, if Quimbo is not drafted in the 12-man senatorial ticket of LP.
On TV interview yesterday, Angara correctly pointed out the Philippines has the highest income tax rate of 32% among ten member-states of the ASEAN. In Singapore, he cited, those earning P500,000 pay only 2% tax; Malaysia 11% and Indonesia at 15%.
“How can taxation be progressive when someone earning P500,000 a year is paying same taxes as a tycoon?” Angara rhetorically asked. In 2005, he recalled, Congress agreed to raise the value added tax (VAT) from 10% to 12% because the country was experiencing “fiscal crisis” during those times. To date though, the fiscal situation has much improved but there is still considerable government underspending.
At present, Angara disclosed the Aquino administration reported P581 billion in “fiscal space,” the euphemism for excess funds in the hands of the government. Quoting an unnamed finance undersecretary, Angara said the government does not know where to spend all the money in its hands.
This is why, he pointed out, it’s time for the government “to give back” to the people some of these excess funds in terms of lower income tax brackets than the present one applied by the Bureau of Internal Revenue (BIR) to fixed income earners. He estimated it would amount only to 5% of revenue loss for the government.
The tandem of Angara and Quimbo earlier succeeded in having co-authored and co-sponsored in their respective chambers the President’s approval into law of Republic Act 10653. Under this new law, employees receiving 13th month pay, Christmas bonuses and other benefits not exceeding P82,000 will now be exempted from tax. It takes effect this year.
Much earlier, the two lawmakers were also instrumental in helping the Aquino administration raise additional revenues for the government with the passage into law of the amended “sin” taxes on cigarette and alcoholic products. So it’s not as if the government will lose so much revenues from the increase of the tax exemption cap for bonuses.
With less than ten months remaining in his term, President Aquino is understandably piqued. Un-intended or not, P-Noy is being made to look bad when the Palace rejected the latest tax relief initiative in Congress.
Although he is already on the way out of Malacañang, President Aquino obviously still wants to remain popular up to his last moments in power.
Through his alter egos, the President’s stand on the proposed tax relief bill being deliberated in Congress has been repeated in public pronouncements. The latest Palace statement came from Presidential Communications Operations Office Secretary Herminio Coloma.
According to Coloma, the Chief Executive might be willing to consider the proposed lowering of income tax rates only if Congress approves the amendment of the country’s Bank Secrecy law that seeks to lift restrictive provisions and tax evasion to be covered by Anti-Money Laundering Law as recommended by the Department of Finance (DOF).
Fortunately, we had a roundtable discussion yesterday with Finance Secretary Cesar Purisima and his two principal deputies, BIR commissioner Kim Henares and Bureau of Customs (BOC) commissioner Alberto Lina. They explained in detail to STAR editors and reporters where they stand on the controversial tax relief bill.
Purisima clarified the DOF would be willing to support the tax reform bill if this would be a “holistic” amendment of the existing National Internal Revenue Code and not a piecemeal legislation.
But as the election season approaches, we would only see more of these proposed tax relief bills fill the air with empty promises.