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Revenue bills like digital services VAT lead House priorities

THE House of Representatives will prioritize revenue measures like a 12% value-added tax (VAT) on digital transactions as well as ease of paying taxes programs, a senior legislator said on Thursday. 

Albay Rep. Jose Ma. Clemente S. Salceda, who heads the House Ways and Means Committee, told BusinessWorld via Viber in reply to a query that budget reform is also on the table.

“We are also studying measures to combat technical smuggling, as brought up by the President in his State of the Nation Address (SONA),” he added.

He called inflation “the greatest challenge to this administration’s first year in office,” alongside food sufficiency and income security.

Rizal Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that “new tax measures or higher tax rates could lead to higher inflation, as seen in past, such as the TRAIN Law in 2018.”

“Any new taxes or higher tax rates could add to the current inflationary pressures and would lead to higher headline inflation,” Mr. Ricafort added.

“New taxes and higher tax rates need to be fair, equitable, and progressive, especially targeted at those that can afford them or those from the higher income brackets or those that at least do not add to the burden to the poor, the most vulnerable sectors, and/or those hit hard by the pandemic,” he said.

Maria Ela L. Atienza, a political science professor at the University of the Philippines, said the government runs the risk of new taxes being received negatively by the public.

“A recent SWS survey also found out that more Filipinos feel poorer or worse off now than before,” Ms. Atienza said. “Pulse Asia surveys also show that people are mainly concerned with economic issues like unemployment, poor pay, and inflation.”

“Add to this is the fact that the current President (Ferdinand R. Marcos, Jr.) and his family still have issues regarding their tax liabilities and ill-gotten wealth.”

She said even if the government fails to address rising prices, protests are not expected until the administration loses popular support.

Mr. Salceda said once the food security and income issues are addressed, “housing should be atop the President’s priorities… That’s the single biggest untapped source of household and national wealth.” — Matthew Carl L. Montecillo

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