AN OFFICIAL of the Philippine Chamber of Commerce and Industry (PCCI) is urging the government to provide small and starting businesses with lower income tax rates and a more simple tax process in the planned tax reform next year.
PCCI Taxation Committee Chairperson Benedicta Du-Baladad said, in an interview, a simplified tax process and lower personal income tax rate would help stimulate the growth of micro, small, and medium enterprises (MSMEs), which according to a survey, cover 99.6 percent of business establishments nationwide.
“Marami kaming members sa PCCI na mga MSMEs, maraming gustong magnegosyo pero hindi makapag-comply sa tax kasi napakahirap at napakalaki ng igagasto mo sa tax (We have members from PCCI that are MSMEs, there are several who wanted to do business but cannot comply with the tax because it is hard and the tax is expensive),” she said in an interview during the Tax Reform Roadshow: Deepening Understanding on Tax Reform for MSEs, on Monday, November 28, hosted by the US Agency for International Development and Department of Finance.
“When you are starting a business, kailangan magpa-register sa local government, kailangan pa doon sa BIR, andaming hinihingi na papeles, at pag may negosyo ka na, kailangan mo magbayad naman ng tax sa gobyerno (you must register to the local government and to the BIR, several documents needed, and when you have your business, you have to pay your tax to the government) which is hard nga if you are still starting, ang laki-laki pa naman ng ibinabayad especially kung single proprietorship yung nature ng business mo (you have to pay a huge amount especially if the nature of your business is a single proprietorship),” she added.
“Our advocacy in the PCCI is inclusive growth, meaning kukunin namin yung mga nasa laylayan ng syudad kaya sabi namin (we have to include those from the marginal side of the society, just like we said), on the top side, dapat tingnan namin kung asan sila matutulungan para sumama sa growth na hinahangad natin, at wala na sa underground economy, meaning nasa tax net na sila (we have to see where we can help them so they can be a part of the growth we desired, and not in the underground economy, meaning they are in the tax net),” she added.
Baladad said small businesses are having a hard time completing tax compliance, which are “long and expensive,” this is why, she said, they are advocating that the tax reform program will also include and benefit small businesses.
Lovely Labaan, owner of a boutique, said tax compliance almost got in the way of her business.
She said it took months for her to process the requirements, adding last year, she temporarily closed down due to high taxes.
“Sometimes I comfort myself that what I pay will help build schools and roads, and probably educate the marginalized but they are just too high, dili ko makabawi gayud (I cannot recover) most of the time, dili ko maka-hit sa akong quota (I cannot hit my quota),” she said.
For the government to reduce the personal income tax, it needs to implement countermeasures, such as increasing petroleum excise tax, real property tax for richer local government units, and even removing all value-added tax exemptions, said Baladad.
She said the senior citizens and persons with disabilities (PWDs) should not worry for the possible removal of their benefits, since the government has already come up with measures.
For senior citizens for example, higher socialized pension with rice subsidy will be pushed, and higher Philhealth coverage and benefits will also be implemented for PWDs.
According to the Finance Department, poverty rate will be reduced from 21.46 to 14 percent by year 2022, sustain economic growth of at least seven percent every year, which will come, first through reducing personal income tax while raising consumption taxes by next year.
“It’s always a bigger picture when we talk about tax reform, kailangan natin itong tingnan hindi sa isang perspective lamang (we should not look at it from a single perspective),” Baladad said.
