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‘Blame Congress for tax incentives to rich, hikes to poor’

MANILA, Philippines Senate President Juan Ponce Enrile conceded yesterday that Congress is partly to blame for giving tax incentives to the rich but continues to increase taxes on the poor.

Enrile made this disclosure during the public hearing by a Senate finance sub-committee chaired by Senator Ralph G. Recto on the proposed 2012 R11.5-billion budget for Department of Finance (DoF) and its allied agencies.

“On the side of revenue generation, we in Congress are to blame. We give tax incentives like no capital gains tax all for the rich but we increase tax on the poor… the VAT (value-added tax) …all these are burden of the masses but the affluent they live comfortably out of taxes foregone by the government in their favor,’’ Enrile said.

Enrile said the biggest contributor to the government coffers is the value-added tax (VAT) that the poor people pay.

He asked: “Is this in accord with our constitutional provision that we have to develop a progressive tax system?’’

The Senate chief cited government plans to increase taxes on cigarettes, wines and distilled spirits which have perceived ill-effects on one’s health.

“These are consumables for the poor people of the country yet we are targeting this as a source of income for government but in the case of the big guys, they amass wealth, they export their incomes instead of using it here, they bring it to China to give jobs to the Chinese, to Papua New Guinea to give jobs to Papuans, to Canada to give jobs to Canadians and to Guam to give jobs to Guaminians but no jobs for Filipinos,’’ he said.

Enrile admitted that he could not understand why the government is trying to attract foreign investments “but we are also exporting capital and I cannot understand this policy”.

“Is there anything that prohibits us from imposing a capital tax on these people? Or why not impede them from exporting capital?’’ he asked.

Finance Secretary Cesar V. Purisima assured Senate leaders yesterday that his department has begun an in-depth review to make an equitable and progressive tax system.

Recto also told Enrile that he, as chairman of the Senate ways and means committee, is in constant contact with Purisima on the need for Congress to amend about 180 tax-related laws for a rationalized fiscal incentives program.

In defending the proposed 2012 budget of the DoF and its related agencies such as the Bureau of Customs (BoC) and Bureau of Internal Revenue (BIR), Purisima said the national government is targeting a programmed deficit of 2.6 percent of the gross national product (GDP).

“This is well within our program of reducing our deficit to two percent of the GDP by the end of 2013 and the plan is to maintain it at that level for the rest of the (sixyear) administration of President Benigno S. Aquino III,’’ Purisima said. (Mario B. Casayuran)