Improve collection before raising new taxes, expert urges gov't


Posted at Oct 09 2017 05:01 PM

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MANILA - The government may not be fully ready to implement an ambitious tax system overhaul, even as it pushes for the passage of an enabling law within the year, a tax expert said Monday.

Authorities should first address inefficiencies in collections before imposing new duties, said Mon Abrea, president of the Abrea consulting group.

President Rodrigo Duterte's economic team is seeking higher taxes on fuel and sugar-sweetened drinks to help offset a reduction in personal income tax rates and fund a P8-trillion infrastructure program.

"Why do we have to force increases in collections from new taxes for the 'Build, Build, Build' when the main issue is really the inefficiency of our administration in collecting the existing taxes that we have?" Abrea told ANC's Market Edge.

"So it might just be a futile exercise of coming up with more taxes when the BIR is not even ready to collect these new taxes," he added. 

Abrea said the government had not collected fully from the increase in value added tax to 12 percent from 10 percent during the Arroyo administration.

"I don't think we will be able to collect more even with new taxes at hand," he said.

Citing a study of the Canadian tax system, Abrea said the only way to address inefficiencies in tax administration is through automation. 

The House version of the tax reform bill is simpler to administer than the Senate version, he said.

While the Senate version requires taxpayers to present proof of dependents to avail of the maximum exemption of P250,000, the House version dispenses with the requirement and exempts everyone earning P250,000 and below, he said.

Proposed taxes on sugar-sweetened beverages could be deferred if the government would impose a 200-percent tax on luxury cars, he said.