National Economic Development Authority (NEDA) Director-General Arsenio Balisacan on Monday expressed support for a proposed bill aiming to lower income tax rates, but suggested at the same time to find new revenues sources for making up for the resulting shortfall.
Balisacan told journalists after the hearing on the P7.05-B budget of his agency for 2016 about the need to find new revenue sources before thinking of lowering income tax rates, so as not to affect the government’s spending program, particularly on infrastructure projects.
He said the proponents of the measure lowering income tax rates would do well not assume that everything will turn out right once the measure is passed into law.
“Our people are also expecting better infrastructure, better social services, better school and health facilities, and so on,” Balisacan explained to the Senate finance sub-committee chaired by Senator Ralph Recto.
In fact, Balisacan said, there is urgency on the part of the government to continue raising tax revenue “because we still have a huge backlog in infrastructure, social services, and, now environmental services, because of climate change.”
“There are many emerging needs, and you just have to find sources of revenue,” he said.
Balisacan, however, acknowledged that he is in favor of simplifying the tax system “so that it is not regressive.”
“Although in the books it appears progressive, it is the low-income groups paying a higher comparative burden. We would have to address that problem,” the NEDA chief said.
“We have to deepen the tax base as we try to correct the inequities in the tax system,” he added.
Recto, meanwhile, believed that the government can find other sources of revenue to cover the P30 billion that will be foregone from the government coffers due to the proposal to lower income tax rates.
The senator pointed out that the tax reduction measure can help boost domestic consumption amid the weak global economy, which is predicted to last until 2020.
He said the economy will not be unduly affected by the proposed income rate reduction since income earners will also be using that same money to buy basic commodities.