Government mulls launch of major tax amnesty next year

MANILA, Philippines - The Duterte administration is planning to launch next year what could be the biggest tax amnesty program in 16 years.

“We are thinking of four tax amnesty (programs),” Finance Secretary Carlos Dominguez III told a tax consultation forum Wednesday night.

He said the program will cover arrears on property tax, estate tax, income tax and those with pending tax cases, and will be included under one of the five tax reform packages.

Finance Undersecretary Karl Kendrick Chua said the measures would be “complementary” to the first package the government submitted to Congress last Monday.

“These are tax administration and not policy measures. They are being designed as we speak and the details we will let you know once it is clear,” Chua told reporters after the forum.

Once passed, the amnesty program will have the widest coverage since the second voluntary assessment program (VAP II) undertaken in 2001 under the Arroyo administration.

VAP II covered all internal revenue taxes and ran for four months. It gave delinquent taxpayers the chance to settle their arrears without penalties.

Congress records showed the program raised P3.45 billion, accounting for 0.88 percent of Bureau of Internal Revenue collections.

Chua declined to provide estimate of revenues to be raised from the planned amnesty program.

Dominguez said the tax amnesty should help in clearing tax delinquencies, especially in estate taxes.

“Sometimes, the only problem is that they were not able to change the name on the title for years,” he told reporters earlier at the House of Representatives, explaining shortfall in estate tax collection.

For pending cases, the finance chief said the goal is to “clear up” court dockets by allowing taxpayers to settle “at least 40 percent or whatever percent they (legislators) desire.”

The Department of Finance (DOF) is preparing to submit to Congress tax reform packages that it hopes would be implemented separately until 2019.

The package includes lowering of personal income tax rates and removing value-added tax exemptions.

“Package 1-B” seeks to raise excise levies on tobacco and alcohol as well as impose new tax on sweetened drinks.

“It is going to be a healthy tax. It is a tax reform for a healthy Philippines,” Chua said.

Package 2 will include lowering of corporate taxes to 25 from 30 percent, while rationalizing fiscal incentives for investors.

Package 3 will contain lower estate tax to six from 20 percent as well as donor’s taxes, while package 4 seeks an adjustment in the capital levy on bank deposits and investments to a uniform 10 percent.

Anti-poor

For Rep. Carlos Zarate of Makabayan, the Duterte administration’s tax proposals are “anti-poor,” as they would burden low- and middle-income workers more than high-income earners and the rich.

He said the suggestion to exempt from income tax annual earnings of up to P250,000 only, or P20,833 a month, would hurt many employees of both the private and government sectors.

“Where did this figure come from? What is the basis for this? The amount of P250,000 is way below the annual family living wage of a Filipino family that is now pegged at P396,390 or P1,086 a day based on a study,” he said.

He added that this was the basis of his proposal to set the amount of annual tax-free income at P396,390.

Zarate pointed out that aside from giving workers insufficient tax exemption, the administration would burden them and the rest of the public with higher fuel and consumer prices with its proposal to increase the tax on oil products.

“They will impose a P6-per-liter tax on diesel, kerosene and cooking gas, which will directly hit poor households. Since diesel is widely used for transportation, the imposition of a P6 tax will result in higher fares and cost of transporting goods, which will translate into increased consumer prices,” he stressed.

Aside from the P6 tax on diesel, kerosene and cooking gas, the proposed tax reform package the DOF has submitted to the House calls for increasing the levy on gasoline from P4.35 per liter to P10.

Zarate urged DOF’s Dominguez to come up with a genuinely progressive tax system that would tax the rich more than the poor.

“The country’s tax system should be designed according to the country’s concrete condition of severe inequality and widespread poverty – not from what is seen as ‘doable’ for being unopposed and supported by the rich and by big corporations,” he said.

He said at least 17 million Filipino families who earn P20,000 a month or less “should not be taxed at all.”

He said Dominguez should instead impose higher taxes on the “50 richest oligarchs, who have a combined net worth of $79.5 billion or P3.8 trillion, bigger than next year’s proposed national budget of P3.35 trillion and the 690 ultra high net worth Filipinos who have at least P1.4 billion each.”

He added that the finance secretary should also collect more from other rich Filipinos, including corporate executives, and the top 1,000 corporations.

“These rich families and large corporations benefit the most in the exploitation of our economy, natural resources and our cheap labor. It is only just and equitable that they shoulder a large part in funding the social and other amelioration program of the government,” he stressed.

Speaker Pantaleon Alvarez said the House of Representatives would study the DOF-proposed tax reform package to determine if it is doable.

He has frowned upon the proposal to remove the value added tax exemptions of millions of senior citizens and persons with disability.