MANILA: Finance secretary Carlos Dominguez yesterday said part of the tax reform package his office will present to lawmakers is the plan to increase real property taxes.
In a speech before senators and the Cabinet cluster, he said the new property rates will unlock the value of land and help local government units raise revenues.
A study done by the Asian Development Bank showed that real property taxes in the Philippines have largely been unchanged for decades and assessment of land values remained stagnant. Earlier, Dominguez also disclosed that there is a plan to lower estate taxes from the current 25 percent or higher to a flat six percent to encourage updated documentation of land ownership.
New tax measures like luxury and casino taxes will also be imposed to make up for revenue losses stemming from the plan to reduce corporate and individual income taxes. Dominguez said the Duterte government aims to cut poverty rate from the present 26 percent of total population to 17 percent through investments that create meaningful jobs. He said taxes will be lowered to make the country at par with others in the region and to encourage more investors.
According to Dominguez, the tax reform program, to be submitted to Congress in a few weeks, will be designed to raise revenues and support inclusive growth. The program will maintain the sustainability of the Philippine debt program, attract investments, create meaningful jobs and eradicate poverty. That package must attempt to make the tax system simpler, fairer and more efficient, with the goal of broadening the tax base, lowering the tax rate and increasing revenues.
Dominguez explained the excise tax on oil has not been adjusted for two decades and the significant drop in oil prices will allow the government to adjust the tax rate to inflation.
He added the government is also looking at a tax on sugary and fatty foods, which will be similar to sin taxes, to encourage consumers to buy healthier foods. “We are designing a system that will be more transparent, performance-based, highly targeted and time-bound. By increasing the effective tax rate for companies receiving incentives and reducing the corporate tax rate, we improve the equity of the whole system,” he said.
