MANILA, Philippines - President Benigno Aquino III on Monday rejected proposals to lower prevailing income tax rates.
Aquino said decreasing income tax rates will lead to fewer government revenues and will only expand tax collection deficit.
The president feared that this will affect the country's credit ratings.
"Ang tanong, kapag binawasan natin ‘yung income tax, mababawasan ‘yung revenue, lalaki ‘yung deficit. Iyong paglaki ba ng deficit magiging negative factor kapag ni-rate sa atin o ni-rate tayo nitong mga credit ratings agencies?" Aquino said in an interview with reporters in Iloilo.
Aquino also bucked calls to increase value-added tax (VAT) to compensate for the expected government revenue loss due to income tax rate cuts.
He said higher VAT rates will only increase oil prices, transportation fares and power rates.
"So ang tanong, makakabuti ba 'yung pagbababa ng income tax level sa mga kababayan natin? At ako’y hindi kumbinsido sa ngayon," Aquino said.
"Parang ang gandang pakinggan, ano, 'uy, nadagdagan 'yung disposable income ko,' para sa isang bahagi," he added. "Pero sa kabilang bahagi naman, tataasan naman 'yung kokoleltahin sa VAT, 'yung taxes on oil at iba pa. Baka naman ito walang nangyari sa iyo at ang tatamaan nga mas marami doon sa mas kaunti ang kakayahan." - Louis Bacani