AER seeks alternative revenue measures to finance government services

MANILA, Philippines - The Action for Economic Reforms (AER) yesterday challenged the critics of the tax reform bill to present other alternative measures that can finance the requirements needed for government services such as health care and education.

In a statement, the AER said critics, such as Bayan Muna and Freedom from Debt Coalition, oppose the Tax Reform for Acceleration and Inclusion (TRAIN), but fail to propose other solutions.

“These critics oppose the proposed excise tax on fuel, tobacco and sugar, but they fall short in providing concrete solutions. They demand efficiency of collection before taxes, yet they resist the reforms that will improve tax administration like the broadening of the value-added tax (VAT) base and the adjustment of fuel taxes to inflation,” Jo-Ann Diosana, AER’s senior economist, said.

Diosana said those opposing the tax reform “want money for free education, universal health care and modernization of public mass transportation, but they do not want new taxes.”

“The critics are correct in calling for taxing the rich, but they are not aware that the revenue from taxing the rich, which in fact is included in the tax reform, will still be insufficient to fund the attainment of Ambisyon 2040. All citizens have a responsibility to pay taxes, with those having the ability to pay having to pay more,” Diosana added.

“At the same time, the generous reduction in personal income tax rates which will rightly provide relief to the working class and other income earners will, however, reduce government revenues by P141.4 billion,” the AER said.

“In other words, there is no escaping tax reform to fund the development requirements, to recover the loss of revenue from the personal income tax relief and to correct the weaknesses of the tax structure,” it added.

Thus, the advocacy group is calling for other civil society organizations to support the tax reform program, which will fund programs in education, healthcare, social protection and infrastructure.

“Statements and actions critical of the tax reform bring publicity but on their own, without concrete, feasible proposals, they’re unlikely to bring about the progressive change in the tax system,” Diosana said.

On the other hand, AER said there is an increasing number of non-government organizations that support the TRAIN.

These include the Health Care Without Harm Asia, which asked the Senate Committee on Ways and Means, which supports the fuel excise tax as a measure to help decrease the contribution of fuel in greenhouse gas emissions.

In a position paper submitted to the Senate, the group said the higher fuel tax would help address air pollution by discouraging excessive and inefficient consumption of gasoline and diesel.