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PCCI airs full support to tax reform

Positive impact on economy


By Bernie Cahiles-Magkilat


The Philippine Chamber of Commerce and Industry (PCCI), the voice of small and medium enterprises in the country, expressed its full support to the enactment of the tax reform measure aimed at lowering personal income taxes while broadening the tax base by restructuring and increasing tax on consumption.

PCCI President George Barcelon said the tax reform package as a whole will have a positive impact on the economy.

Barcelon said that lowering personal income tax will increase disposable income, spurring savings and/or consumption, which leads to increased production.

A virtuous cycle could ensue, he said, where greater consumption and production could lead to rise in tax collection.

“It is high time the country reduces personal, as well as corporate, income taxes to make it comparable with those enjoyed by citizens of neighboring Southeast Asian countries,” he added.

The Philippines, he said, has the highest tax rates (both nominal and effective) in ASEAN.  Inflation, he explained, has pushed many low income earners into progressively higher tax brackets (the “bracket creep” phenomenon).

In the interest of fairness, social justice and competition, Barcelon said personal income tax brackets need to be adjusted for inflation at the very least and at once.

The chamber also welcomed the offsetting measures, which aim to increase levy on consumption to make up for the loss in lower personal income taxes.

“The government needs the incremental revenue expected to be collected once the new taxes are implemented, to finance planned higher spending on infrastructure and social services,” he said.

With more government spending on public health, education, social protection and infrastructure, the country’s competitiveness can be furthered bolstered if not at par with its ASEAN neighbors.

Barcelon cited that at 1.6 percent, 3.4 percent, 2.9 percent and 2 percent of the GDP, the Philippines’ spending on social services and infrastructure has been well below its ASEAN neighbors.

In addition, PCCI also extend its full support to the proposal to reform the tax administration.

PCC’s taxation committee co-chairs, Atty. Benedicta Du-Baladad and Ms. Tammy Lipana meanwhile explained that the current tax regime is a burden especially to SMEs.

Tax forms have become too complex, making compliance extremely difficult for small businessmen without the help of tax accountants.

SMEs have to file and pay a multitude of taxes almost every month, spending a considerable amount of time that would have been more productively used for creating and growing their business.

It is high time, they said, that the tax administration is simplified to correct inefficiencies and to make it responsive and supportive of dynamic changes, make it competitive and empowering of the people and of industries and enterprises.

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  • Mark Gapuz

    Glad to hear! Now, when will the government support companies that help easy payment of taxes like Taxumo.com kaya?