A modern-day ‘Robin Hood’
Taxes, especially new ones, have never been easy to sell. But the Comprehensive Tax Reform Package (CTRP) being pushed by the Department of Finance in Congress seems to be gaining support as it rolls out consultations to the people.
Among other features, new tax proposals in HB 4744 and 4888 explicitly aim to decrease poverty, boost infrastructure spending while pushing inclusive growth through lower personal income taxes for three out of four Filipinos and decreasing and simplifying taxes for small businesses and lowering estate and donors taxes.
To fill revenue gaps, new measures include increasing fuel excise taxes, slapping taxes on new luxury vehicles and removing VAT exemptions such as those on exports.
CTRP was already a need before but it was’t pursued. Perhaps due to the high trust and approval ratings then, some form of CTRP could have been proposed during the Aquino administration.
Yet, as with most things in that government, measures deemed unpopular were not pushed, taxes especially. The feared blowback would not have been controlled as it would have killed the chances of its anointed successor.
This, even after the realty that our tax base is small at 15% of the population, focusing mainly on wage earners, yet under-collecting from those we need to collect from and having too many VAT exemptions and other lopholes that only confuse, rather than streamline, effective collection.
There is a need to shift burdens to those that can better afford to bear them.
Several think tanks are supporting the CTRP, a set of tax measures that, among others, will lower income taxes for wage earners while increasing revenues from sources that deserve to be charged. It is shifting the burden to those who can better afford to bear it.
Even the more conservative Foundation for Economic Freedom (FEF) and the progressive Action for Economic Reforms (AER) have backed up government’s tax reform agenda. AER in particular has told lawmakers that the proposed increases in the automobile excise tax under a “highly progressive” and pro-commuter measure would, to some extent, help ease the worsening traffic crisis in major urban centers.
True enough, limiting the number of new cars on the road reduces the externalities and extra costs brought by traffic and pollution.
Moving forward, we need to tax more unhealthy activities such as tobacco, liquor and sugary products, and make sure that companies who find legal loopholes to deny taxes be plugged.
Take a look at tariffs on imported coffee and chocolate, since we are destined to be a net producer of these commodities in the next few years.
Look at online businesses and transport networks and ride-sharing companies like Grab and Uber. There are many new businesses that require a second look, so that they may be taxed appropriately.
With high popularity and political will, we will find a just and equitable way to generate the revenues we need to boost spending on sectors that need that lift amid a truly inclusive economy, and finally cut poverty to 15%.