Finance Minister for the Philippines, Margarito Teves, has revealed the government's intention to implement higher rates of 'sin' taxes on products such as alcohol and tobacco.
Permission to increase the taxes on these items is being sought in a bid to raise enough revenue to overcome the expected shortfall in the budget, and to offset a 5% cut in the rate of corporate tax to 30%.
Such tax increases are an easy target for the government since they are less noticeable than hikes in other levies such as income tax, and are more likely to gain public acceptance.
Speaking of the move, Teves told a business conference that:
"This proposal is probably the most acceptable to the Filipino public of all the proposed revenue enhancement measures because we are increasing tax on vices."
The increase to 'sin taxes' will form part of a wider fiscal reform for the Filipino government, which is seeking the approval of congress to simplify the income tax system.
It is hoped that Congress will give the government the green light to increase the sin taxes within the next couple of months.
The government estimates that an additional PHP30bn (USD635m) in revenue could be generated per year.
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