Tax bills should get priority, but not rushed
Credit to Author: The Manila Times| Date: Wed, 02 Jan 2019 18:33:11 +0000
IN spite of the Department of Finance’s “optimism” that the remaining four packages of the government’s Comprehensive Tax Reform Program (CTRP) can be passed before the 2019 midterm elections, it seems unlikely they will be. And they should not be rushed but studied carefully, given the importance of the CTRP measures and the profound effects they will have on the country’s economy.
So far, only the first package of the sweeping tax reform measures has become law. That is the “Tax Reform for Acceleration and Inclusion” or Train Act. It lowered personal income taxes and raised excise taxes on fuel, vehicles, coal and sweetened beverages, and went into effect at the beginning of 2018.
Currently, two other packages are being deliberated on by Congress, one seeking to reform the Motor Vehicle Users’ Charge, or road tax, and the other is a more comprehensive measure that tackles corporate income taxes, fiscal incentives to businesses, alcohol and tobacco sin taxes, and mining royalties.
The remaining two packages address reform to property taxes and capital gains taxes; a version of the latter measure has passed the House but has not yet been taken up by the Senate.
The current Congress will not return from its holiday break until January 14, and then will be adjourned again between February 9 and May 20, then finally end its term on June 8. That leaves just 35 days, not counting the weekends in between, for Congress to complete its work. Furthermore, even though the extended session recess between February and May is intended to allow for campaign-related activities, virtually every legislator is likely to be distracted to some degree by the upcoming elections.
Under those circumstances, it is difficult to see where the two houses of Congress will have sufficient time to properly deliberate the pending tax measures and iron out differences between House and Senate versions. Even under the best of circumstances, it is unreasonable to assume the passage of the remaining tax packages will be completely trouble-free.
The measure reforming the road tax, for instance, has been problematic because of the turf war that erupted last month between the House and Malacañang over the abolition of the Road Board. Similarly, Package 2, addressing corporate tax reform. has been held up due to strong resistance to the potential elimination of tax perks for businesses.
In addition, Congress has yet to finalize the 2019 budget, which must take priority over all other work and further shortens the already limited amount of time in which the tax reform measures can be debated.
The tax reform measures presented by the administration are, in general, good for the country, and the sooner they can be implemented, the sooner the taxpayers will enjoy the benefits from them. However, they will have profound effects on businesses, individual Filipinos, and the economy as a whole.
The details of each package need to be examined thoroughly. The Constitution reserves the power of the purse to Congress; it is perhaps the most important power Congress has. The administration, the House, and the Senate all need to allow adequate time and space for Congress to do its job properly — with alacrity and purpose, to be sure, but not with haste.
Resolving even just one of the tax measures — such as the reform of the road tax — would be better for the country, as it would result in measures that are more carefully composed and are far less likely to need later revisions.
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