To cut or not to cut? Presidential bets talk tax

MANILA, Philippines – It’s a gut issue that is shaping up to be among the most important talking points in the coming 2016 national elections: income taxes.

In a forum featuring the 4 “mainstream” presidential candidates for the 2016 elections, renewed proposals to cut down income taxes took centerstage among businessmen and people online.

During and on the sidelines a Tuesday, October 27 forum organized by the Philippine Chamber of Commerce and Industries (PCCI), presidential candidates Vice President Jejomar Binay, Senator Grace Poe, Liberal Party (LP) standard-bearer Manuel Roxas II, and Senator Miriam Defensor Santiago were all asked their take on a bill by Senator Juan Edgardo Angara and Marikina Representative Romero Federico Quimbo.

All but one presidential candidate was absolutely in favor of the measure that would compress the net taxable income brackets, and to lower tax rates, especially for low and middle-income earners. (READ: Presidential bets on taxes, infra and the charter)

President Benigno Aquino II is either cold or hesitant about the proposal, saying it would not benefit the majority because it would reduce government income. Aquino said this, in turn, could endanger the country’s credit rating, which improved during his term.

During a separate media forum also on Tuesday, Aquino reiterated his apprehensions over the proposal.

FOR THE PROPOSED BILL

Santiago was first to speak during the Tuesday forum and said the country’s tax system needs an overhaul. Santiago gave a timeline for this to happen: within the first 6 months of a Santiago presidency.

The chairman of the opposition United Nationalist Alliance (UNA) repeated earlier calls to slash income and corporate taxes, arguing that the Philippines has the second-highest income tax in the Southeast Asian region.

“You are depriving our fellow Filipinos of money that they can use,” he said

On the first day of the PCCI’s gathering, Binay repeated his calls to cut down taxes, promising that under a Binay presidency, taxes would be used properly.

Poe, the front-runner in the latest presidential preference polls, said she “firmly believes” in the need to reform the country’s tax code, which is “one of the highest in Asia.”

“And yet our government services still have to be improved,” she said.

Speaking to reporters after her speech, Poe said tax reform “is one of the first things I’ve advocated.” When she launched her bid for the presidency, Poe promised to lower taxes in the country while ensuring that tax collections would be used wisely.

The senator also dismissed concerns that cutting down on taxes would also mean the trimming down of government services, an indirect allusion to the sole presidential bet who has expressed reservations over the measure.

FOR INCOME TAX REFORM BUT…

Of the 4, only Roxas, the ruling Liberal Party (LP)’s standard-bearer, is not all out for the measure.

Responding to journalist Coco Alcuaz’ question about the proposal, Roxas reiterated his earlier position: while he is in favor of reducing income tax, he put equal emphasis on studying the consequences of reduced government income.

“Are we open to reducing income tax? The answer is always yes. We don’t look at this money as the goverment’s money, it’s the people’s money,” Roxas said during the Q and A.

But the administration bet went one step further on Tuesday, calling for a “very, very sober” and “non-populist” discussion of the proposed measure. (READ: Roxas on lower taxes: But what programs will suffer?)

“It should not be discussed in the heat of the political battle of the elections,” he said.

Both Angara and Quimbo, the most vocal of the bill’s authors, are allied with or part of the Liberal Party. Quimbo is also the spokesman of the LP-led “Daang Matuwid” coalition.

Speaking to reporters after his hour-long turn on-stage, Roxas refocused the issue not on taxes but on the services that would be affected. The admin bet used his favorite analogy – of a homeowners association – to explain his take on the proposal.

Ang tanong ngayon ay sapat ba o tama ba o babawasan ba natin ‘yung ibinabayad natin na dues sa ating homeowners' association, at anong serbisyo, kung meron man ang maapektuhan. ‘Yun lang naman ang aking mungkahi,” he said.

(The question here is – is it right that we lessen the dues we pay to the homeowners' association and which services, if any, will be affected. That’s what I’m saying.)

To emphasize his support of tax reform in general, Roxas said that when he was senator in 2004, he authored a bill to lower the income taxes, expand exemptions, and increase the take-home pay of workers.

Hindi po na ayaw ko po ito. Ako po ang una. Sinasakyan nalang po ng mga iba ‘yung una kong nagawa noong 2004 pa (It’s not that I’m against it. I was first. Other now are just riding on what I already did in 2004),” he said.

In previous interviews, Roxas mentioned the government’s social safety nets are among those that may be cut back should income tax collection dwindle. – Rappler.com