DOF: Duterte admin's tax reform package not anti-poor

The Department of Finance (DOF) on Tuesday dismissed claims that the Duterte administration's flagship tax reform program to adjust value-added tax (VAT) base and excise tax rates are anti-poor.

"It is a fallacy to believe that the proposed expansion of VAT base and adjustments to the excise tax on petroleum products under the proposed comprehensive tax reform program are anti-poor because being consumption taxes, these will impact the most on affluent Filipinos who make use of more goods and services, rather than the poor, low-income and even the middle-class households," DOF said in a statement.

Finance Undersecretary Karl Kendrick Chua claimed that the administration’s proposed Tax Reform for Acceleration and Inclusion Act would even shield poor and low-income consumers from the effects of tax adjustment proposals "because the new government is committed to providing highly targeted direct transfer programs and indirect subsidies to them."

“Rather than being anti-poor, the tax reform plan will actually correct the injustice of only a few enjoying the benefits of growth," Chua said.

"Our primary goal here is to give everyone a better chance of building a more stable future by equalizing opportunities for all through the adoption of a simpler, fairer and more efficient tax system,” he added.

The DOF official noted that failing to adjust the tax would mean continuing to subsidize the rich who can well afford to pay for fuel.

“The use of highly targeted transfers that benefit the poor and other vulnerable sectors is the better and more effective option in addressing equity concerns.," he said.

Chua also corrected the false assumption that the proposed adjustment on the diesel excise tax would be P10 per liter, saying the DOF proposal is only P6 per liter, which represents the accumulated inflation since this tax was last adjusted 20 years ago.

For the expansion of the VAT base, the DOF official assured the public that there would be no increase at all in the tax rate and that all seniors and persons with disabilities would continue to enjoy their VAT exemptions on essentials such as raw food, education and health services, including medicine.?

“Again, it is a fallacy to believe that the revenues from expanding the VAT base would be mostly coming from the poor, In fact, the principle of VAT lies on how much one consumes—meaning the more VATable items one consumes, of course, he or she would have to pay more tax,” Chua said.

“Even then, we should not forget that the income tax relief included in the proposed tax reform plan would be beneficial most especially to the low- and middle-income taxpayers with modest living conditions,” he said. — VVP, GMA News