Foreign biz groups want stronger tax enforcement

MANILA, Philippines — Foreign business groups are urging the government to focus on the enforcement of tax and revenue measures and ensure that new fiscal policies promote competitiveness following President Marcos’ push for reforms in his fifth State of the Nation Address (SONA) on July 27.

In a statement yesterday, the Joint Foreign Chambers (JFC) said it backs Marcos’ continued commitment to advance reforms to enhance the country’s competitiveness, modernize governance and improve the investment climate.

The JFC is composed of the American, Canadian, European, Japanese and Korean chambers of commerce, as well as the Philippine Association of Multinational Companies Regional Headquarters Inc.

It called on the government to prioritize the effective implementation and administration of existing tax and revenue measures, while carefully assessing the competitiveness implications of any proposed new fiscal policies.

“A stable, predictable and competitive fiscal environment is essential to sustaining investor confidence, encouraging business expansion and supporting long-term economic growth,” the JFC said.

In his last SONA, Marcos called on Congress to pass tax relief measures to ease the financial burden on workers, particularly the middle class.

The proposed measures include expanding the income tax exemption by raising the threshold to P350,000 from the current P250,000.

Marcos also said smaller businesses would no longer be required to pay the minimum corporate income tax so these enterprises can recover, expand operations and generate more jobs.

For the World Bank, the Philippines should focus on broadening the tax base.

World Bank senior country economist Jaffar Al-Rikabi said that the Philippines needs to focus on improving tax collection, rather than hiking tax rates.

“There’s a lot of inefficiencies in the current tax system that mean that taxes are not collected at the level of potential,” he said.

While the Philippines’ value-added tax (VAT) rate is at 12 percent and Thailand’s is at a lower seven percent, the two countries’ VAT collection account for the same share in their respective economies, he noted.

“So what does that comparison tell us? It tells you that there’s a lot of room to improve the efficiency of the VAT, without increasing rates,” Al-Rikabi said.

He said this can be done by simplifying the ease of paying taxes.

Priority bills

The Marcos administration is finalizing its list of priority bills for the 20th Congress, which include measures that provide tax relief to workers and businesses, lower power costs and introduce governance reforms, Malacañang said yesterday.

The priority measures were discussed during a meeting of the Legislative-Executive Development Advisory Council (LEDAC) ad hoc team last Monday, according to a statement issued by the office of Executive Secretary Ralph Recto.

The meeting, which was held upon the instruction of President Marcos, was a preparatory session for the upcoming full LEDAC meet, where officials from the executive branch and lawmakers will adopt a common legislative agenda and tackle ways to fast-track their passage.

“The proposed measures are anchored on the President’s vision for a more responsive, transparent and inclusive government,” Recto’s office said. — Alexis Romero