MANILA, Philippines – Senate Minority Leader Ralph Recto wants the government to first cut down on expenses and red tape before increasing taxes or imposing new ones.
The administration must look for frivolous and unnecessary expenses which can be cut or totally done away with before jacking up tax rates, he added.
Recto said government must also “simplify, shorten and streamline” procedures in revenue offices to encourage more people to pay taxes.
“The tax program must be predicated on eliminating red tape first,” he said.
Recto said many taxpayers are willing to pay their dues if only revenue processes are not so cumbersome and complicated.
“The income tax return is 11 pages long,” he said.
“A small business has to undertake 36 tax-related transactions annually. Because of complicated tax rules, a small trader has to put in his payroll an employee whose sole job is to liaise with government offices full-time.” – Paolo Romero
Recto said steep penalties, high fines, short compliance period and arbitrary levying of surcharges must be reviewed and tempered as these prevent individuals from voluntary compliance.
“Tax payment is always by confession,” he said. “Others want to update their arrears but don’t pay because they fear the high penalties.”
Red tape costs the country P140 billion in opportunity losses annually, Recto said, citing a World Bank study last October.
The report ranked the Philippines at a low 95th among 189 economies in overall ease of doing business.
Recto said savings, on the expenditure side, and simplifying tax-paying rules will combine to raise money that will lessen the pain of the new taxes the administration is mulling.
Cutting utilities and communications expenses, meaning power and mobile phone, use by just 10 percent, the government will save P2.3 billion annually, he added.
“Renegotiating office rent of government offices and bringing it down by 15 percent can save P2 billion a year,” Recto added.
The administration is readying a tax package which, when fully implemented over a period of years, is projected to rake in P566.4 billion a year.
This is almost three times the P193.8 billion in annual collections that will be foregone once individual income and corporate tax rates are reduced, Recto said.