Press Releases

The Philippine Chamber of Commerce and Industry (PCCI), the country’s largest business organization, expressed yesterday its full support for the enactment of the tax reform measures aimed at lowering personal income taxes while broadening the tax base by restructuring and increasing tax on consumption.

George Barcelon, PCCI president, said the tax reform package as a whole will have a positive impact on the economy.

Lowering personal income tax will increase disposable income, spurring savings and/or consumption, which leads to increased production, Barcelon said.  A virtuous cycle could ensue, where greater consumption and production could lead to a rise in tax collection.

Barcelon said reducing personal, as well as corporate, income taxes will make them comparable with those enjoyed by citizens of neighboring Southeast Asian countries.

The Philippines, he said, has the highest tax rates (both nominal and effective) in ASEAN.

 Inflation, he said, has graduated many low income earners into progressively higher tax brackets (the “bracket creep” phenomenon).

In the interest of fairness, social justice and competition, Barcelon said personal income tax brackets need to be adjusted for inflation at the very least and at once.

PCCI  welcomed the offsetting measures, which aim to increase levy on consumption, ge said.  The country’s competitiveness can be furthered bolstered Barcelon stressed, if spending in public health expenditure, education, social protection and infrastructure, are at par with its ASEAN neighbors.

Barcelon cited that at 1.6%, 3.4%, 2.9% and 2% of the GDP, the Philippines’ spending on social services and infrastructure has been well below its ASEAN neighbors.

 Barcelon said government needs the incremental revenue expected to be collected once the new taxes are implemented, to finance planned higher spending on infrastructure and social services

The Chamber fully supported the proposal to reform the tax administration.

The Chamber’s Taxation Committee co-chairs, Atty. Benedicta Du-Baladad and Ms. Tammy Lipana, meanwhile,  explained that the current tax regime is a burden especially to SMEs.

Tax forms have become too complex, making compliance extremely difficult for small businessmen without the help of tax accountants.  SMEs have to file and pay a multitude of taxes almost every month, spending a considerable amount of time that would have been more productively used for creating and growing their business. 

Du - Baladad and Lipana said  the tax administration needs to be  simplified to correct inefficiencies and to make it responsive and supportive of dynamic changes, make it competitive and empowering of the people and of industries and enterprises.

To ensure understanding of the proposed tax reform measures, specifically of House Bills 4688 and 4773 or the Tax Reform for Acceleration and Inclusion (TRAIN) and HB 4888 or the Tax Administration Reform Act, and to build a broad base of support for said measures, the PCCI, in partnership with Department of Finance and the USAID’s Facilitating Public Investments (FPI) program, is conducting the second phase of the Tax Reform Roadshow.

Titled “Deepening Understanding of the Tax Reform Program”, the roadshow commences in Davao City on February 17 for Mindanao-based firms.  In the line-up are the South Luzon leg at the Puerto Prinsesa City on February 24, the Visayas leg in Bohol on March 3.  The last leg will be for Metro Manila and North Luzon on March 10 in Makati City. -30---

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