Canlas urges overhaul of tax system

Socioeconomic Planning Secretary Dante Canlas said over the weekend that the country’s tax system is in need of another overhaul.

"The budget deficit which has reached almost P188 billion for the first 10 months of the year has been due to a shortfall in revenue which can be traced to the incomplete implementation of the Comprehensive Tax Reform Program," Canlas said.

Canlas said that under the last overhaul of the government’s tax program, "additional exemptions were granted to personal income tax payers which could be one of the reasons for the drop in government revenue."

On the other hand, the tax program was also supposed to institute changes in the corporate tax system which would have plugged revenue shortfalls.

Canlas was specifically referring to the disallowance of certain corporate tax exemptions and placement of a cap on allowable corporate expenses.

"But while the personal tax reforms were already being implemented, the corporate tax reforms are only now being utilized," he added.

As a result, government still has to see what effect the corporate tax reforms will have on the overall revenue collection.

"Government should review the tax program anew and perhaps institute another round of reforms," Canlas said.

Government sources opined that the country’s tax program has continually been under "repair" since the time of former President Corazon Aquino.

Each succeeding administration tinkered with the program and continues to do so under the present administration, they said.

"In fact, the country’s excise tax system has seen several shifts from ad valorem to value-added, creating confusion during every shift," they said. – Marianne Go