By Kyle Aristophere T. Atienza, Reporter
THE MARCOS government will have a difficult time convincing Congress to pass recent tax measures amid high living costs, analysts said, after the Department of Finance (DoF) chief hinted at pushing recent taxes.
Philip Arnold “Randy” P. Tuaño, dean of the Ateneo School of Government, said lawmakers are unlikely to approve recent tax measures that may affect most of the people after the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act was signed into law.
“This will likely create an unfavorable impression that the administration is aligning themselves to large businesses and foreign investors to the detriment of the center and lower income classes,” he said in a Facebook Messenger chat.
President Ferdinand R. Marcos, Jr. on Monday signed into law CREATE MORE, which lowers the company income tax (CIT) rate and provides more incentives for businesses registered with investment promotion agencies.
Mr. Tuaño noted there was public backlash over the Tax Reform for Acceleration and Inclusion (TRAIN) Act, the first a part of the Duterte administration’s comprehensive tax reform package.
It restructured and reduced the rates of non-public income tax but imposed higher taxes on tobacco products, petroleum products, automobiles, several nonessential services, sweetened beverages and mineral products.
“Within the previous tax reforms under TRAIN, the perception was that by reducing personal and company income taxation but increasing excise and value-added taxes, the federal government was favoring enterprises and better income groups, and this might also occur again,” Mr. Tuaño said.
“Historically, reforms just like the expanded value-added tax law faced backlash attributable to perceived burdens on on a regular basis consumers, fueling public resistance to any additional tax increases.”
The implementation of CREATE MORE is predicted to guide to about P5.9 billion in revenue losses from 2025 to 2028, the Palace said.
Asked how the federal government could offset these losses, Finance Secretary Ralph G. Recto said: “We’ve got other revenue measures which we’re pursuing. I just discussed also with the Speaker and the Senate President some financial taxes that we’re reconsidering.”
“We just plan accordingly. If there’s a revenue loss here, then we glance for an additional bill that can gain the revenue,” he said on the sidelines of the signing ceremony for CREATE MORE on Monday.
Jonathan L. Ravelas, senior adviser at skilled service firm Reyes Tacandong & Co., said Mr. Recto’s response was to be certain that “whatever erosion in revenue attributable to CREATE MORE, there’s a source to plug it.”
“They’ve a possible tax in mind to pass. These might have been a number of the measures that weren’t implemented by the previous administration,” he added in a Viber message.
Mr. Ravelas also cited the proposed tax on junk food and sweetened beverages, which then Finance Secretary Benjamin E. Diokno said could add about P70 billion to state coffers while addressing diseases related to poor weight loss plan.
The proposed excise tax on single-use plastics, which was already approved on third and final reading on the House of Representatives, is a priority laws of the Legislative-Executive Development Advisory Council.
But Environment Secretary Maria Antonia Yulo-Loyzaga last month told BusinessWorld on the sidelines of a Palace briefing that the bill could only advance in Congress if the country comes up with cheaper alternatives to plastic.
One other fiscal measure on the LEDAC’s priority list is the proposed rationalization of the mining fiscal regime.
The proposed motorized vehicle road user’s charge has not been included within the list, which was last updated in June.
Meanwhile, Mr. Recto’s latest remark on pursuing recent “financial taxes” — a shift from his previous statements that the federal government wouldn’t introduce recent taxes — could mean that the federal government was struggling to seek out recent revenue sources.
“The actual fact they’re in search of alternatives indicates there’s a shortcoming that should be filled,” John Paolo R. Rivera, a senior research fellow on the Philippine Institute for Development Studies, said in a Facebook Messenger chat.
Within the face of inequalities, the federal government should consider taxes on wealth or certain luxury items, which might not affect lower-income households, he said. The federal government may consider higher taxes on high-emission industries to incentivize “cleaner business practices while generating recent revenues.”
Mr. Rivera said the federal government must also boost non-tax revenues by improving tax compliance, streamlining collections and expanding public-private partnerships for infrastructure and development projects.
Hansley A. Juliano, who teaches politics on the Ateneo, said the absence of a powerful opposition would enable the Marcos administration to push recent tax proposals in Congress.
“Considering there’s really no opposition figure reaching the Senate Magic 12 in the intervening time, administration allies clearly find it easy to get ahead with these sorts of possibly unpopular policies,” he said in a Facebook Messenger chat.
The Philippines will hold midterm elections next 12 months, with 55 people vying for 12 Senate seats. Filipinos may also elect district representatives and other local officials in an election seen to be a referendum of the administration’s performance within the previous years.
Because the midterm elections approach, fiscal difficulties will “present opportunities for candidates to project themselves against a wide range of scapegoats and in support of alternatives,” Anthony Lawrence Borja, a political science professor on the De La Salle University, said.
Jose Enrique A. Africa, executive director of think tank IBON Foundation, said the federal government “desperately needs recent taxes to expand urgent social and economic services as well to contain bloated government debt.”
“The federal government must take the long view of what is required for strategic economic development and transformation after which plan major revenue measures accordingly,” he added.
Leonardo A. Lanzona, who teaches economics on the Ateneo, said the federal government will “proceed to depend on indirect taxes which corporations will only pass to their consumers,” amid fears higher taxes will discourage investments.
“Ultimately, fiscal consolidation just isn’t achieved, and an economic crisis ensues,” he said.
