“Any measure that will increase the exemptions will reduce the revenue and that is why we are suggesting that the approach be holistic but the power is with Congress so we defer to them but we do give them our views,” Finance Secretary Cesar V. Purisima told reporters at the sidelines of the House of Representatives’ plenary deliberations on the proposed 2015 national budget, which began yesterday.
Tax laws that would decrease government revenues, Mr. Purisima said, should be accompanied by measures that would in turn address their impact on tax collections.
“One example: if you lower the income taxes, that means our revenues will decrease. Then give us more administrative capacity to broaden the tax base or adjust the exemptions,” Mr. Purisima explained.
The Finance chief said the review of the country’s tax structure is ongoing and the International Monetary Fund (IMF) and the World Bank are providing assistance to address “technical issues”.
Asked for a timetable, Mr. Purisima said: “It’s really dependent on the ability to get through technical issues so that we can present to Congress what are the best options in this regard.”
“It’s going to be multi-pronged because we’ll have to look at transaction taxes, income taxes, duties and I think it’s important that we make it easier for our people to comply because our challenge has always been that the tax base is narrow.”
The House of Representatives on Sept. 9 approved on second reading House Bill 4970, which seeks to raise the tax exemption cap for employee bonuses to P70,000 from the present P30,000.
HB 4970 is a consolidation of 12 bills that sought to raise the tax exemption cap for 13th month pay and other benefits, like Christmas bonuses and productivity incentives, in a bid to provide relief to Filipino taxpayers.
This consolidated measure, which amends Republic Act No. 7833 -- a 30-year old law that imposed the P30,000 cap on bonuses -- was approved by the House committee on ways and means last Sept. 3 and was endorsed for plenary debates.
The measure is up for third and final reading this week.
A counterpart measure to this bill at the Senate, meanwhile, is pending at the committee level.
Both chambers of Congress have said that they are moving to fast-track this proposal and other similar measures that seek to give employees some relief in the face of rising prices.
Senate President Franklin M. Drilon said his chamber has already agreed with the House to approve the measure raising the tax exemption cap for bonuses in time for Christmas season.
“We have an agreement with the House of Representatives that we will pass this bill within the year, so that Christmas could be merrier for our workers,” a Sept. 3 statement quoted him as saying.
Mr. Purisima last month said that any review of the tax system should involve the whole structure to ensure benefits to those concerned.
A holistic review, he said then, would ensure a tax system that is “more equitable, more progressive, more competitive, but with an impact of making it more buoyant and positive.”
The Bureau of Internal Revenue, which contributes bulk of the government’s tax revenues, collected P763.148 billion in the seven months to July, up 9.99% from the same period last year but short of an P831.063-billion target for the first seven months.
The bureau is mandated to collect P1.456 trillion in taxes this year. -- M.F.E. Flores
source: Businessworld
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