CEBU, Philippines - Former Finance Secretary Jose Isidro Camacho believes that lowering income tax rates will help both businesses and workers.
“I know lowering the income tax rates could generate more economic growth and would obviously help not only businesses but also employees,” Camacho said in an interview at the sidelines of an event of Sun Life Philippines yesterday in Cebu.
Camacho is the current managing director and vice chairman of Credit Suisse Asia Pacific and chairman of the board of Sun Life.
While he is personally supportive of reducing tax rates, Camacho said he also understands the government’s concern of its impact on state revenues which are essential to sustain public spending.
Camacho said the government has several expenditure requirements such as infrastructure spending and its cash transfer program for the poor, among others.
“You know I can see the benefits of it (lowering tax rates) but on the other side there are expenditure requirements they (government) are facing,” said Camacho, who served as secretary of the Department of Finance (DoF) from 2001 to 2003.
Camacho also pointed out the government should also address its poor tax administration.
“If we can further improve our tax administration, people would voluntarily pay the right taxes or we continue to improve our system – our structure,” he said. “We can generate more tax revenues. It would be good for the economy.”
The official said the government must simplify the tax system in the way that it allows fewer tax rates and exceptions.
In a statement it released last September, the DoF said it pushes for a tax system reform.
DoF said that “eroding revenue without making up for lost ground in fiscal space threatens government’s ability to deploy basic services in pursuit of the inclusive growth agenda.”
“I have always believed that a reform of our tax laws is long due,” DoF Secretary Cesar Purisima was quoted as saying in that statement.
“But I believe in true tax reform: one that does not look at certain, popular aspects in isolation without making hard choices to sustain our momentum and secure our future,” Purisima said.
Currently, several proposals for income tax adjustment are pending in Congress. Counterpart measures are likewise pending in the Senate. – Carlo S. Lorenciana (FREEMAN)