Pro-rich, anti-poor tax program passes through House committee –IBON

May 5, 2017

by IBON Foundation

As the Tax Reform for Acceleration and Inclusion Act (TRAIN) which contains the first part of the Department of Finance’s (DOF) proposed Tax Reform Package advances in Congress, research group IBON reiterated that this legislative proposal remains biased for the rich and burdens the poor.

With the majority approval of the House of Representatives committee on ways and means, the tax reform proposal will now move to the committee on appropriations for review before transmittal to the House plenary for second reading and debates.

The proposed tax law essentially seeks to raise an additional Php400 billion by 2019 to fund increases in infrastructure spending for the administration’s so-called ‘golden age in infrastructure’. The proposal purportedly intends to lower personal income taxes while expanding the coverage of value-added tax (VAT) and imposing additional taxes on oil and sweetened beverages.

IBON however reiterated that with this proposal, wealthy families will be paying less income taxes and other taxes, while the poor majority will face higher taxes on goods and services.

The group had earlier pointed out that the package includes a reduction of income, property-related taxes and capital income taxes to the benefit of the wealthiest.

The group also initially estimated that in the DOF’s Tax Reform Package the richest will be paying around Php178.3 billion less in reduced personal and corporate income taxes, estate and donor taxes, and capital income taxes. Consumers, meanwhile, will be paying about Php341.6 billion more for the VAT to be charged on previously exempt items and higher excise taxes on petroleum products. Additional taxes will also be paid by consumers for every sugary beverage they buy. The Tax Reform for Acceleration and Inclusion bill is a key component of the DOF’s overall tax reform package.

These contradict the DOF’s claim that its tax reform is progressive and pro-poor, according to IBON. The group repeated that the package remains regressive and elitist as it offsets lower taxes paid by the wealthiest Filipinos by putting additional tax burden on the poor majority of consumers amid their already very low incomes and insecure livelihoods.