IBON: DOF insistence on its tax package confirms anti-poor, pro-rich Dutertenomics

September 15, 2017

by IBON Foundation

Research group IBON said that the Department of Finance’s (DOF) resistance to even minor changes in its proposed tax reform program confirms the anti-poor and pro-rich character of the Duterte administration’s economic policies.

The Senate Ways and Means Committee proposed minor changes to shift some tax burden from the poor to the rich at its final hearing on the DOF’s Tax Reform for Acceleration and Inclusion (TRAIN) bill. But the DOF said that it would insist on its original proposal during plenary deliberations and the bicameral conference.

Committee chair Sen. Juan Edgardo M. Angara said that the committee’s counter-proposal will be “maybe 50 to 60 or 70% of what the DOF proposed”. According to Angara, changes to lessen what the poor pay include lowering the sugar-sweetened beverage excise tax and retaining VAT exemptions on socialized housing, cooperatives, senior citizens and persons with disabilities. Meanwhile, the rich will pay more from higher taxes on foreign currency deposit unit interest income, dividend income and cosmetics and perhaps from re-bracketing of auto excise taxes. There will be additional taxes on plastic bags, but the only changes in the petroleum excise tax will be its phasing.

IBON executive director Sonny Africa said that the Senate’s proposed changes are a welcome effort but still not enough to change the inequitable and unfair character of TRAIN. The TRAIN’s most anti-poor aspect is that it increases consumption taxes on a population where the income of the majority is too low for decent living and its most pro-rich aspect is that it avoids greater income and wealth taxes on the highest-income and super-rich Filipinos, Africa said.

According to Africa, in the Philippines the lowest income groups struggle with incomes of just Php5,100-15,800 monthly compared to the richest Filipinos who have Php303,000 to as much as Php6 million monthly.

“For all of Pres. Rodrigo Duterte’s tough talk against oligarchs, the administration is apparently still afraid to more correctly tax the few super-rich,” Africa said. Taxation has to be genuinely progressive taxation where the consumption taxes the DOF prefers for being easy to collect from the poor majority are replaced with direct income and wealth taxes on the few super-rich who, having so much, can also afford to pay so much more, concluded Africa.