Tax reform can benefit the poor: economist

BUSINESS
August 28, 2017

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MANILA -- Poor families can benefit from the Department of Finance’s (DOF) tax reform proposal with the highly targeted cash transfers that will be distributed to the country’s poorest households, according to an economist.

Rosario Manasan, a senior research fellow of government think tank Philippine Institute for Development Studies (PIDS), said 40 percent of the increment on excise tax from petroleum will be used for targeted cash transfers.

Manasan, an expert in public finance, noted that target beneficiaries will be identified utilizing the National Household Targeting System of the Department of Social Welfare and Development (DSWD), the same tool used by the Pantawid Pamilyang Pilipino Program (4Ps).

But she said both Congress and Senate have yet to decide whether to provide the targeted unconditional cash transfer for three years based on Senate Bill 1408, or for one year only as stipulated in House Bill (HB) 5636.

“My own recommendation is three years to give time for the transfer to have some impact on growth and benefit the poor,” Manasan stressed.

HB 5636, also known as the Tax Reform for Acceleration and Inclusion (TRAIN), is part of the DOF’s Comprehensive Tax Reform Program (CTRP) that recommends the lowering of personal income tax (PIT) but increasing excise taxes on fuel, new cars and sugar products.

In contrast, poor families will not benefit from the reduction of the PIT because they are not paying any personal income tax even under the present system as their incomes are below the taxable threshold.

But Manasan said poor families are also bound to be adversely affected due to the proposed increase in the excise tax on petroleum products and expansion of the coverage of the value-added tax (VAT).

The House of Representatives has already approved its version of the TRAIN (HB 5636) last June 2017.

Currently, the Senate Committee on Ways and Means is deliberating on the HB 5636 as well as Senate Bill 1408, the version of the TRAIN that was filed by Senate President Aquilino Pimentel III. (PNA)


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