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Senate won't pass Malacañang's version of tax reform bill

MANILA, Philippines – Senators expressed opposition to Malacañang’s version of the tax reform bill, and slammed National Economic and Development Authority chief Ernesto Pernia for “pressuring” them to approve the administration measure.

Senator Juan Edgardo Angara, chair of the ways and means committee, said the imposition of higher taxes would affect the poor, as also voiced by the Department of Social Welfare and Development (DSWD).

“Eh kung sila [DSWD] kumokontra doon eh, kami sa Senado paano namin itutulak ang tax package kung nakakasama sa mahihirap ito?” Angara, who is eyeing reelection in the 2019 midterm polls, told reporters on Wednesday, May 31.

(If DSWD is opposing it, how can the Senate push for a tax package that harms the poor?)

Angara and Senate President Pro-Tempore Ralph Recto said they would pass the measure but with major revisions. Under the law, tax measures should emanate from the House before they are transmitted to the Senate.

“I think we can come up with a measure in the next few months. It’s just that it may not be exactly what's being pushed by the executive,” Angara said.

Recto said: “I'm sure we will pass something but it doesn't mean...everything the executive wants ay ibibigay (will be given). But I'm sure madaming mababago pa diyan (there will be a lot of amendments there).” 

On Tuesday, May 30, the NEDA chief criticized the House of Representatives for passing a watered-down tax reform measure. If Congress would not pass the executive’s version in full, Pernia said the planned infrastructure boom would not happen. (READ: Duterte's tax reform: More take-home pay, higher fuel and auto taxes)

Duterte has earmarked P8 trillion to build new roads, airports, and railways to sustain the growth of the economy.

“It’s not going to be the golden age of infrastructure. It will be the bronze age, maybe, of infrastructure, or maybe dark age of infrastructure. So that is how terrible, that is how unwelcome ,the non-passage of the [comprehensive tax reform program] is going to be,” Pernia said in a press conference in Malacañang.

“There’s a problem, then we will be unable to fund the build, build, build. It will be small build, small build, small build….Maybe no build, no build, no build,” he added.

This did not sit well with Angara, who said Pernia is setting up Congress for failure.

Yeah, we don’t appreciate that pressure coming from the executive branch because we’re doing our best here. It seems we’re being set up for failure eh kumbaga kung di pinasa gusto nila kasalanan namin kung bumagsak ang ekonomiya (it's like if we don't pass it, the collapse of the economcy would be our fault)," he said.

"Bakit kami ba nasa manibela? Sila may hawak ng manibela, nakasakay lang kami doon, 'di ba? (Are we the ones behind  the wheel? They are the ones driving, we are just passengers, right)” Angara said.

Angara also pointed out that the administration of then president Benigno Aquino III was able to achieve economic growth with just raising excise taxes on alocohol and tobacco.

“That’s not true because the Aquino administration was able to build a lot of infrastructure, able to grow the economy by 6% with only raising sin taxes. Bakit di nila kaya 'yun (Why can't they do that)?” he said.

'Arrogance'

Senate Minority Leader Franklin Drilon also slammed Pernia for urging lawmakers to listen to and "trust" the economic team more because the senators “are not as well-versed" on the matter.

Labingsiyam na taon na ako ritong tumitingin ng budget (I have been scrutinizing the budget for 19 years). I do not claim expertise but certainly we know something about the budget. I find that arrogant. Ang yabang naman niya (He's so arrogant). Such arrogance,” Drilon told reporters.

Recto, for his part, said, "Patunayan din nila expert sila para gastusin yung pera (They should also prove that they are experts when it comes to spending money)."

Pernia on Tuesday said Congress should realize that the economic team knows what is “best and optimal” for the country and has “no personal agenda.”

“Congress should have passed it in toto. Because, you know, they should realize that we in the economic team, our interest is really just the country’s development, the improvement of society. We have no personal agenda at all. And we are trained to do economic analysis, tax analysis, as we know what is best, what is optimal. So that is my message really," Pernia said.

“And, you know, I don’t think the legislators are as well versed as the economic team is. I mean, the legislators as a whole, some of them may be experts but not all of them; and they work as a whole. And the economic team also works as a whole and therefore, you know, they should have more trust in the economic team," he added.

Prove spending capacity first

Recto, a former NEDA chief, said the government should first prove it could spend its budget before seeking new taxes.

Well, ang una ko masasabi, titingnan sa debate diyan kung nagastos ba nila at nagagastos ba nila budget sa taon na ito kasi kung di rin nila nagagastos at mahina absorptive capacity, bakit kailangan ng new taxes? Aanhin mo 'yung pera kung di mo magastos?" Recto said.

(First, what I can is that in the debate, we will see if they had spent and are spending their budget for this year because if not, and the absorptive capacity is weak, why the need for new taxes? What will you do with the money if you can't spend it?)

He also questioned the disparity between the amount of tax relief the public will get and the additional taxes they will pay.

Madami issues diyan, paulit-ulit ko na sinasabi ito. Halimbawa ang ibabalik to your left pocket by way of an income tax reduction ay P200, pero kapalit noon kukuha ng P500 billion sa kabilang pocket mo naman. Neto sila ng P300 billion. So panalo ka ba doon?” Recto asked

(There are a lot of issues there, I keep on saying this. For example, what you will put in your left pocket by way of income tax reduction is P200, but in exchange, they will get P500 from your other pocket. Their net will be P300 billion. Will you win in that case?)

Under the DOF proposal, personal income tax will be reduced but higher excise taxes will be imposed on fuel, automobiles, and sugar-sweetened beverages. – Rappler.com

Camille Elemia

Camille Elemia is Rappler's lead reporter for media, disinformation, and democracy. She won an ILO award in 2017. She received the prestigious Fulbright-Hubert Humphrey fellowship in 2019, allowing her to further study media and politics in the US. Email camille.elemia@rappler.com

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