PROPOSED plan to increase taxes by the finance department could need further evaluation, as if the plan would be realized it will add burden to the people and even lead to government's capital flight.
Thus, said Councilor George Goking, chair of the City Council’s committees on trade and commerce and on ways and means, after Finance Secretary Carlos Dominguez suggested to higher taxes to service the country's debts incurred to address the Covid-19 pandemic.
“More study is needed so that both the people and government will not have to carry so much burden,” said Goking.
He did not elaborate that it is a bad idea, but Goking stressed that certain challenges have to be addressed first.
He even explained that except the pandemic, another hard times coming, the impact of oil prices to ordinary Filipinos.
Goking said the first day after Russia "invaded Eastern Ukraine - the price of Brent Crude already rose by $3.81 per barrel.
Goking said, that based on a statement, the price of oil is expected to close above $100.00 per barrel for the first time since 2014 anytime.
“They may not be seeing these prices for a long time,” he said adding that what they are seeing is the lowest prices of oil products in the Philippines before Brent crude prices hit above $100 or more per barrel.
“Once Brent Crude reaches $110.00 per barrel – a liter of diesel here in the country will retail for P100 per liter or more,” said Goking quoting the statement.
It added that P100/liter Diesel prices will do to the prices of rice, pork, sugar, flour, cooking oil and other basic goods if you are only making P500/day.
“Empirical studies have shown that taxing more than an “appropriate” level is counterproductive,” said Goking.
He also clarified that the plan must carefully identify and determine the appropriate level of tax that would not lead to negative consequences.
“As of this time the city’s economy is still recovering and almost all businesses incurred losses due to the pandemic,” said Goking.
Dominguez did not say what new or higher taxes may be included, but he cited the viability of carbon tax, a levy on cryptocurrencies, removal of all exemptions from 12-percent value-added tax payments, as well as further hikes of excise taxes on cigarettes, e-cigarettes, alcoholic drinks and sugary beverages were currently being studied and considered.
The risk of capital flight may depend on how the government uses the tax revenues it collects, according to Goking.
“Taxes need to pay foreign obligations but we need also to understand and look into the situation of businessmen,” said Goking adding that it cannot be denied that some businesses are still closed due to lack of capital.
Goking said that people still need to cooperate with the government to solve the problem, so that both the people and the government will not have to carry so much burden amidst the pandemic. (Ben Balce)
