DOF tax reforms relieve rich while burdening poor — IBON
DOF tax reforms relieve rich while burdening poor — IBON
THE GREAT DIVIDE
The growing gap between the rich and the poor is best illustrated in this photograph showing the midrise buildings and skyscrapers of the Makati Central Business District
overlooking the shanties of Barangay San Roque
Riverside in Pasay City.
RAFFY LERMA/ File photo from Inquirer.net
RESEARCH group IBON said that the Department of Finance’s (DOF) proposed tax reform program relieves the rich and burdens the poor. The group said that this will worsen inequality in the country and should be replaced by a tax program that taxes the rich instead and is backed with the required political will.
The DOF proposed tax reform program seeks to raise an additional Php600 billion by 2019. IBON noted that it will do this by raising taxes on the country’s poor majority and reducing taxes paid by the rich and big corporations
According to the group, the rich will benefit from lower income taxes, property-related taxes, and capital income taxes:
The top personal income tax rate will go down from 32% to eventually just 25 percent. Around 6.7 million deserving wage and salary earners also stand to benefit from the DOF’s plan to update 19-year-old tax brackets. These will result in Php139.0 billion less revenues for the government in just the first year of implementation.
The corporate income tax will go down from 30% to 25 percent. Corporations will pay Php34.8 billion less in income taxes.
The tax rate on property-related transactions of the wealthy will be cut. The estate tax of 20% will go down to 6% of the value of property being transferred. Donor taxes and transaction taxes on land will also be cut. The rich will pay Php3.5 billion less in estate and donor taxes.
The tax on interest income earned on peso deposits and investments will also go down from 20% to 10 percent. The rich will pay Php1.0 billion less in capital income taxes
IBON observed that the DOF plans to offset lower taxes paid by the wealthiest Filipinos by increasing taxes on the poor majority. The poor will suffer higher prices from value-added tax (VAT) being charged on previously exempt items, higher excise taxes on petroleum products, and a new sweets tax:
The 12% VAT will be charged on the widest range of consumer items in the country’s history with exemptions on just very few necessities like raw food, education and health. Consumers will pay Php163.4 billion more for the same goods and services.
There will be higher excise taxes of Php6-10 per litre or kilogram on diesel, LPG, kerosene and the entire range of oil product prices. Consumers will pay Php178.2 billion more when they buy oil products or pay for correspondingly more expensive goods, services and transport fares.
The sugar excise tax starting at Php5 per kilogram will increase the prices of sugary foods, fruit drinks, sodas, sweetened tea and coffee, sports drinks, and other sweetened products. Consumers will pay Php18.1 billion more for the sugary products they buy
IBON said that the administration’s economic managers are using Pres. Rodrigo Duterte’s current popularity to push an unpopular pro-rich neoliberal tax agenda. But the people need vastly improved public and economic services. This should be financed by those who have already accumulated so much and not by those who have so little as it is, said the group.
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