Binay bucks proposed 14 percent VAT

MANILA, Philippines - Vice President Jejomar Binay rejected yesterday the government’s proposal to raise the 12 percent value-added tax (VAT) to 14 percent to compensate for revenue losses to be incurred from the possible lowering of income taxes. 

The Philippines has the highest VAT rate in the region, Binay said.

“Increasing VAT should be a last resort,” he said.

“Raising VAT would cancel the effects of the tax reform act and defeat the goal of allowing the people to enjoy more of their hard-earned money,” he added.

Binay said lowering tax rates would allow consumers to spend more and the government will recover some of the short-term revenue losses through increased consumption taxes without necessarily increasing VAT.

Instead of being fixated with VAT, the Vice President said the government should look at other options such as improving tax collection and launching a more aggressive campaign to catch tax evaders.

He said the government should consider sliding scale excise tax on gas, diesel and other oil products; selling government assets and privatizing select state-owned and controlled corporations; passing revenue-generating measures and enforcing stronger crackdown on smugglers.

Binay described the country’s tax system as “burdensome and exasperating.”

“The recent report that the Philippines has the most tedious tax payment system underscores the urgency of tax reform in the country,” he said. 

“While the much-touted gains of the so-called straight path of this government are hardly felt by the people, the government also makes it hard for them to pay taxes,” he added.

Binay cited a study by international audit firm PricewaterhouseCoopers, which ranked the Philippines 127th among 189 economies in the ease of paying taxes.

The study showed that businessmen take 193 hours to pay 36 different kinds of fees and taxes per year in the country, he said.