The country’s leading business executives are opposing the government’s “continued reliance” on tax increases while state spending continues to be excessive, pointing out its severe impact on the financial well-being of Filipinos.
The Management Association of the Philippines (MAP), which comprises the country’s tycoons and business leaders, specifically questioned the proposed Government Revenues Optimization through Wealth Tax Harmonization (GROWTH).
The GROWTH bill, proposed last December by the Department of Finance (DOF), includes a proposed increase in estate tax, donor’s tax, and capital gains tax from six to ten percent.
“This policy approach is not only unjust but also detrimental to economic growth, wealth transfer, and the financial well-being of Filipino families,” MAP stated.
In a letter addressed to President Ferdinand “Bongbong” Marcos Jr., the business group pointed out that estate taxes were reduced in 2018 with the enactment of Republic Act (RA) No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN).
The donor’s taxes, according to MAP, were similarly reduced to simplify real property taxation.
The group noted that tax bases of real property taxation is expected to increase with the new valuation system, as embodied with the recent passage of RA No. 12001, or the Real Property Valuation and Assessment Reform (RP-VAR) Act.
“An increase in capital gains tax, estate tax and donor’s tax rates, coupled with the impending increase in real property valuation, will definitely hurt and prejudice taxpayers,” MAP underscored.
The group explained that this would hike the taxation rate of individual taxpayers to 35 percent—a rate much higher than the income tax rates imposed on corporations.
This move primarily penalizes responsible financial planning and discourages generational wealth-building, which further widens economic inequality, they said.
“Such increase in rates will stunt and impede real property transactions and development,” it added.
Department of Finance (DOF) Secretary Ralph Recto previously said that the proposed GROWTH bill—which is essentially an upgraded version of the Passive Income and Financial Intermediary Taxation Act (PIFITA) bill—will give the government additional P300 billion in revenues in the next five years.
The bill remains as a mere proposal since it has yet to be tackled by any chamber of Congress.
Balancing act
MAP President Al Panlilio said the group’s tax committee found it vital to have a delicate balance in the increase of taxes and where the government spending goes.
“Of course we support the government increasing revenues but it has the revenues today and where is it spending?” asked Panlilio during the sidelines of the MAP’s General Membership Meeting on Wednesday, Feb. 12.
MAP earlier joined other Philippine business groups in demanding a transparent budget process after controversies surrounding this year’s national budget.
Now, the group is asking greater transparency as to where public funds go.
“At the end of the day, it’s taxpayers’ money and I’m sure the people want to know where the tax payments go to,” added Panlilio.
As indicated in MAP’s letter to President Marcos, the group seeks a moratorium on new tax increases until a comprehensive audit on government expenditure is conducted, alongside substantial reduction in government expenditures.
MAP also wants fewer funds spend on what it described as wasteful spending, such as excessive travel, redundant agencies, and wasteful government projects.
In addition, the group demands stronger anti-corruption initiatives, as well as policies that encourage long-term financial planning and inter-generational wealth transfer.
“The Filipino people deserve a government that is accountable, efficient, and mindful of the economic hardships its citizens face,” MAP said.
“We sincerely hope that you will listen to the growing frustration of taxpayers and take immediate steps to implement a more balanced and just approach to public finance,” the group told President Marcos.
