CEBU, Philippines - Lawmakers must introduce new tax measures to offset the possible government budget deficits that will be triggered by the recent tax reducing measures being filed in Congress, a local official of Bureau of Internal Revenue urged.
The Congress recently approved the bill increasing the tax exemption cap of 13th month pay and other bonuses of salaried workers from the current P30,000 to P82,000. It only now waits President Aquino’s signature for approval.
But Jose Hector Baronda, assistant chief of BIR Cebu’s Legal Division, said the Congress should have allowed the bureau to identify new revenue sources first before backing up the said bill.
“If they are ready to increase that exemption cap, the Congress should also be ready to allow us identify new untapped sources of revenue. But the problem is they won’t allow new taxes,” Baronda told The FREEMAN in an interview.
“We can’t just reduce our revenue sources without developing other untapped sources of revenue,” he said.
He warned such law which is set to be implemented next year would surely affect the fiscal performance of the government.
And if, in any case, a new tax generating measure will be pushed next year, Baronda said it would not likely be implemented right away.
The opportunity of Congress to immediately act on new measures can also be diluted as the 2016 elections already approach.
In a recent convention in Cebu, Finance Secretary Cesar Purisima said the finance agency is looking at executing reforms in the country’s tax system to improve tax collection efficiency.
Financial institutions International Monetary Fund and World Bank already urged the Philippines to legislate measures that would widen tax base, rationalize fiscal incentives for investors and modernize customs system to solve shortfalls in government funds.
Revenue sources
Imposing higher taxes on sin products has proven to be effective in raising BIR's collection. The bureau said potential revenues can also be derived from the digital economy.
BIR Cebu officials said electronic commerce is a missed sector which is supposed to be a source of revenues. Taxing the online business also improves transparency and curbs tax evasion.
Rosa Maria Rubin, Collection Division OIC-assistant chief, stressed the need to develop a taxation policy framework for electronic commerce amid the significant growth of online trading.
“We really have to study the [online] industry first,” she said. “If we have difficulty in taxing the professionals, how much more the e-commerce and other virtual activities.”
Rubin noted many have now established their virtual offices especially in coffee shops to engage in online trading. (FREEMAN)