By: Elena Grace Flores
Check and balance is still the bottom line for the government to be able to run it without much financial difficulties. The proposal during the Business sector’s meet with Duterte to increase the vaue added tax or VAT to 14 percent instead of 12 in lieu of the no income tax from 25 thousand and below could mean that people from the middle income group down to the lowest can now have more spending power. Businesses however tend to pass the higher VAT to the customers – but despite of that, the Duterte administration can be assured that the poorer citizens can enjoy more of their money’s worth.
It was noted from the Daily Tribune that: ““When there’s higher disposable income among consumers, they tend to spend more too. That would result in a higher VAT revenue,” Pernia said.“The policy of the new government is to reduce tax evasion, reduce corruption and reduce smuggling,” he added. Duterte has promised during the campaign season that those with a monthly income of P25,000 or less should be exempted from paying income taxes. Duterte also said prior to the elections he was against income tax reduction. Duterte proposed then a simplified tax collection system and privatization of the Bureau of Internal Revenue (BIR) and other government collection agencies”.
In real context, this should work for as long as the basic commodities like rice, fresh commodities and grocery items are spared of the increased VAT – but luxury items like alcohol, cigarettes, cosmetics and other things can even go a bit higher – so that the sales tax contributors will be from those who can afford it. Those who can’t should learn to discipline themselves not to have such vices.