Enrile: RP needs tax reforms to meet MDG goals

MANILA, Philippines - Senate President Juan Ponce Enrile said yesterday the country needs tax reforms if it wants to reach its Millennium Development Goals and extricate itself from an “economic and social quagmire.”

“Unless we rethink our tax system, all these things that we are talking about here will become meaningless because we just don’t have the resources to achieve what we want to,” Enrile said at the launch of a citizens’ report on the country’s MDG progress. The goals are aimed at helping the country reduce poverty significantly by 2015.

Enrile is pushing for a graduated taxation system in which a citizen would be taxed based on his or her earnings. He said the tack would increase the purchasing power of the poor.

“More affluent people...should (shoulder) more of the burden of paying our way in this world and finance the development...for the less capable members of society,” he said.

The citizen report was released in response to the government’s fourth progress report on the eight MDGs, which include poverty eradication, gender equality and environmental sustainability.

Isagani Serrano, one of those who prepared the citizen report, said the official data did not reflect the “deterioration of the national situation”.

“The Philippines is in a worse poverty situation in 2010 than when it started on the MDGs in 2000. We are losing the war on poverty,” he said.

Enrile also cited the low taxes on stock market profits.

“The problem is (the rich) earn their money here, they enjoy good taxes and they invest their savings in other countries...beyond the reach of the Philippine government,” he said.

But Rep. Hermilando Mandanas said tax reform was not necessary because money could be raised through cleaning up corruption and simplifying the tax system.

As much as P20 billion could be raised from actually lowering value added tax (VAT) from 12 percent to six percent, by scrapping the input tax credit system whereby companies reclaim VAT from the government, he said.

Speaker Feliciano Belmonte Jr. said he was “alarmed” by the report’s findings and resolved to take action.