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On Monday, a workshop was held to consult business leaders entitled as "Sulong Pilipinas: Hakbang Tungo sa Kaunlaran." Speaking to businessmen, incoming Finance Secretary, Carlos G. Dominguez said, "The new administration will definitely review the tax system, initially to update the income tax brackets and eventually to lowering corporate and individual tax rates. We wish to see our workers having more disposable income to do as they wish."
Apparently, the Duterte administration plans to decrease individual and corporate tax rates as well as to reduce on foregone revenues by constricting the perks given away to both the investors and value-added tax (VAT) exemptions. Also, "Our corporate tax rates will be adjusted to be competitive with the rest of the region to make our economy more competitive for investments," the finance-secretary-to-be, Dominguez added.
Nevertheless, he stressed that we need to "Broaden the tax base even more to compensate for lower rates," then sought a discussion from the business community regarding proposals to raise the VAT from 12% at pesent. And it seems that a Department of Finance study recommended to increase the percentage to 14. During a press briefing, Dominguez stated that the future economic leaders desire to reduce the list of VAT-exemptions to compensate for expected revenue leaks from lower taxes and rates.
To emphasize his point, he mentioned that in Thailand, the VAT rate was a lower 7 percent and had a bigger economy, however its share of VAT collections to the gross domestic product (GDP) of 4.2 percent was similar to that in the Philippines, which basically means there was ineffective collection here. The Dominguez told reporters that among the VAT exemptions, those covering senior citizens and as well as persons with disabilities may be kept.
Dominguez along with Budget chief Benjamin E. Diokno both notice the possibility of accommodating the excise taxes slapped on fuel, which had remained constant for almost twenty years.
In the meantime, Diokno will push another measure which is the rationalization of tax incentives being given away to investors, pointing out that there were around 200 laws allowing the grant of fiscal perks.