Tax reform to lift 250 K Pinoys out of poverty

MANILA, Philippines — The government’s tax reform program could help lift up to 250,000 Filipinos out of poverty over the next six years, the National Economic and Development Authority (NEDA) said.

Reynaldo Cancio, director of NEDA’s National Policy and Planning Staff, said the agency’s analysis showed that reforms in the tax system could help reduce poverty in the country and create about 500,000 additional jobs for Filipinos.

“We say that in terms of employment, the tax reforms could generate about half a million additional jobs over the next six years. With respect to poverty, our analysis is that it could lift about 200,000 to 250,000 Filipinos out of poverty. So that’s out of the six million that’s been targeted over the next six years,” Cancio said during an earlier hearing of the Senate ways and means committee on the Tax Reform For Acceleration and Inclusion (TRAIN) Act.

According to Cancio, the bulk of the jobs are expected to be created in the construction and retail sectors.

Meanwhile, leaders of foreign business groups have also reiterated their support for the tax reform bill, citing its benefits in leading the country into an investment-led economy.

Julian Payne, president of the Canadian Chamber of Commerce of the Philippines, said the TRAIN would benefit people with lower-level incomes and make the tax system more progressive.

“We definitely support the fact that (TRAIN) will maintain a responsible fiscal framework that will include funding for the public sector, for fiscal and social infrastructure, which will benefit the poor as well,” said Payne, who also represented the Joint Foreign Chambers of the Philippines (JFC) during a Senate hearing.

On the other hand, fiscal reform advocacy group Action for Economic Reforms criticized the proposed two-tier automobile excise tax under the Senate version of the TRAIN, saying it would impact the middle class more than the rich, and would adversely affect the government’s Comprehensive Automotive Resurgence Strategy program.

The approved auto excise tax amendment in the Senate Bill 1592 provides for a simpler two-tier tax of 10 percent for vehicles priced up to P1 million, and 20 percent for those priced over P1 million.

AER senior economist Jo-Ann Diosana said the House version, which proposes to increase the excise tax rates of basic cars to four percent and higher increases for high-end cars, is more progressive than the Senate version.