Deputy speaker: Burden of taxes on poor with new excise, sugar tax

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Metro Manila (CNN Philippines, May 25) — House of Representatives Deputy Speaker Miro Quimbo backs lower income taxes, but has reservations with the other aspects of the Comprehensive Tax Reform Plan, he expressed on Tuesday.

Speaking to CNN Philippines' The Source, Quimbo said that the decrease of personal income tax but increase of other taxes "not only negates, but it more than offsets whatever benefit that you have."

"You free up the middle class up to 250,000 by exempting them from income taxation. There's money that you lose," said Quimbo. "Where do you recover it? You recover it from those who are not benefiting from the tax reform system."

Under the proposal, working Filipinos get lower income tax charges and no tax charges if they earn under P250,000 a year. However, it also looks into an additional P10 charge per liter of sugar sweetened beverages, as well as higher taxes for new cars and fuel.

Quimbo said that minimum wage workers, farmers, and fisherfolk do not pay taxes, yet they will have to make up for taxes when they purchase diesel or other goods that will be affected by a hike in fuel tax.

"They don't benefit from the tax reform program, yet they suffer from the other bills or laws, or provisions that we seek to recover," said Quimbo. "Unfortunately, the transfer [of burden] will affect those [who] are not going to benefit from the program."

Lawmakers opened the plenary debate on the tax reform bill, which is set to be voted on its second reading.

Quimbo said that he has high hopes the plan for personal income taxes will be met with approval, but he is not so sure about other aspects of the proposal.

"[I'm] confident because the income tax reform is just too imperative to stop," said Quimbo. "It's really a time bomb waiting to explode, and people are just tired of paying for the most exorbitant and highest taxes every month."

He also said that he thinks a new bill on excise taxes on fuel will be passed before the year ends.

"I'm confident it will not be passed in its present form," he added. "I think what we need to be able to do is to temper all these increases so that the targeting is actually correct."

Related: Tax reform bill critics call plan 'anti-poor'

DepEd, DOH, DBM defend tax reform

However, officials from the Department of Budget and Management, Department of Education (DepEd), and Department of Health (DOH) disagree. DepEd Assistant Secretary Nepomuceno Malaluan argued that the plan is actually pro-poor.

"What is anti-poor is if we come to a tragedy where... this is not taken as a package," said Maluluan. "[Some] individuals in the name of protecting the poor mangle the CTRP and cherry pick those that are popular because of the tax relief. But at the same time end up with a net tax take that is less than where we started from."

DBM Director Rolando Toledo said that under the plan, "targeted transfers will be put in place on the part of the DBM to protect the poorest of the poor and the most vulnerable sectors that will be affected by the tax reform."

According to a release from the DOF, both DepEd and DOH are expected to benefit in investments from the proposal. The higher sugar tax is also expected to curb obesity and diabetes.

Minimum fares, commodities impacted

Quimbo anticipates that the additional tax on diesel will "bring about at least a 50 centavo... increase in minimum fare."

He added that jeepneys and cargo trucks make use of diesel because of cheaper prices and longer mileage.

Quimbo said that it would have a "deep inflationary effect," and he is expecting inflation to go over one percent.

"At the current inflation of three percent, you add that, that's going to be the highest inflation in ages-particularly for fuel," Quimbo added.

He said that basic commodities in the grocery or market, particularly foods, would also feel the price hike because of these additional charges for transportation.

"There's a major component in the production of food that's fuel-based," said Quimbo.

"They present it in a way that diesel is mostly consumed by the rich, but when you look at the impact on a per capita basis - meaning the impact it has on a person - it mostly affects the poor," he added.

While the Deputy Speaker expressed his support on taxes on cars, he said he found the tax on sugar to be "a bit too high."

"When the tax is too high it becomes difficult to implement and evasion takes place," said Quimbo. "If you do that, it's just going to promote more corruption or shifting to the underground economy."

No more VAT exemption for cooperatives

Meanwhile, COOP-NATCO Party List Representative Anthony Bravo said the proposed tax reform package will deny benefits to the cooperative sector.

This was refuted by House Ways and Means Committee Chair Dakila Cua, insisting it will generate more income for the sector through tax incentives and subsidies.

The proposed tax reform will repeal special laws which exempts cooperatives and state universities and colleges from paying value-added tax (VAT).