Tax Reform In Philippines Set To Raise P30 Billion

by Robert Lee, Tax-News.com, London

26 October 2001

Speaking on Wednesday, Filipino Finance Secretary Jose Isidro Camacho predicted that planned tax reforms could generate around 30 billion pesos in additional revenue.

The reform proposal recently submitted to Congress seeks to halve the tax rate imposed on corporations and individuals, a move which has been popular with individual taxpayers in the Philippines.

However, big businesses based in the country are less than happy- despite the reduction in the income tax rate, they fear that they will end up paying more tax in the long run, as the proposed 15% tax would be levied on gross income, whereas the present rate is imposed on net income.

In an interview with a Filipino newspaper, executive director of the Makati Business Club, Guillermo Luz explained the concerns of the country's business community in these uncertain economic times: 'There is no compelling reason to go into this gross modified tax scheme. Not when businesses are already suffering.' He added that although the changes would doubtless raise government revenues, they would not be equitable to all, and should be reconsidered.

However, Mr Camacho appears to support the planned reforms wholeheartedly, and announced this week that the new measures would simplify the tax system, and by lowering the tax rate, would widen the tax base.

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