MANILA, Philippines – Despite widespread public support, the Philippine Chamber of Commerce and Industry (PCCI) and the Management Association of the Philippines (MAP) yesterday expressed some reservations on the Duterte administration’s tax reform plan.
“It is a non-issue that we need to do a (tax) re-bracketing, but aside from addressing equity and progressivity, tax laws should also be simple, equitable and efficient,” MAP governor Benedicta Du-Balalad said.
“I don’t see that yet,” she told the House ways and means committee hearing tax bills.
Du-Balalad cited difficult taxing mechanisms on fringe benefit taxes on corporations as well as those on micro, small- and medium-enterprises (MSMEs), which she said could be “lumped all as compensation.”
Under the National Internal Revenue Code, fringe benefits such as housing, vacation expenses, life and health insurance are charged a separate 32 percent on their gross monetary value.
Concerns were also expressed on “discrepancies” on data used to gauge the number of those employed by MSMEs.
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The Bureau of Internal Revenue and the Department of Labor and Employment have different figures.
Du-Balalad, also speaking for the PCCI, also said tax evasion is a possibility once a higher 35-percent tax rate is imposed on “ultra rich” individuals.
The plan, which will be part of the first of the four package of reforms, will be slapped on those earning more than P5 million annually. Currently, the highest rate of 32 percent is charged against those getting above P500,000.
“The profile of ultra rich, these are those who can put their money outside the country,” Du-Balalad said.
Coupled with higher oil excise taxes, she said there is a “possibility of tax evasion.”
In response, Finance Undersecretary Karl Kendrick Chua said consultations are ongoing to make the tax reform program more acceptable.
In increasing oil excise tax rates, Chua said changes would be implemented gradually. “The proposal will have a gradual implementation beginning 2017 and will mature by 2019,” he said in the same hearing.
The DOF will be submitting the first of its four tax reform packages for Congress approval within the month.