February 2, 2023

Pinoy Trekker

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Salceda rejects IMF offer to shift tax base for motor vehicles

HOUSE Ways and Means chairman Joey Sarte Salceda rejected the International Monetary Fund’s (IMF) proposal for the country to switch its vehicle tax system from a luxury-based to an emissions-based system, saying it was unfair to the poor .

In a statement on Thursday, the Albay Second District representative noted that the IMF’s recommendation in its new report will place an additional tax burden on the poor as it will cover public jeepneys (PUJs), which remain one of the country’s main forms of commuting .

“I can’t justify taxing a low-emission luxury car at a lower rate than a public service jeepney — especially during elevated inflation and the return of personal involvement,” Salceda said.

“I can’t justify this to the Filipino commuter nor the PUJ driver who was impoverished by Covid-19 (novel coronavirus disease) travel restrictions,” he added.

Legislators agreed with the IMF that the vehicle tax regime needs to be updated to allow the government to generate additional revenue using gross vehicle weight as a basis.

He said the new system will take into account a vehicle’s contribution to road damage, congestion and environmental damage.

To mitigate the program’s impact on commuters, lawmakers said the government should also provide “direct subsidies for the purchase of new units of clean jeepneys.”

Revenue Generators

SALCEDA also backed the IMF’s proposal to implement measures that will generate large revenue gains but will not dampen economic growth.

These measures include the passage of the pending tax break bill in the Senate to make it easier for low-income earners to pay their taxes.

“Low income taxes should be coupled with higher tax collection efficiency. The key link is easier tax compliance. Even if we lower tax rates and compliance is still difficult, taxpayers will not comply diligently,” lawmakers said.

Another way to improve government revenue is to “broaden the VAT tax base,” Salceda said.

“We are investigating how to implement de minimis VAT. and abolish duty-free imports. We suspect this is one of the major sources of tech smuggling,” Salceda said.