Wednesday, April 20, 2005

Taxes Under GMA Administration Becoming More Regressive

Press Release/April 19, 2005
Reference: Mr. Paul Quintos, Executive Director, EILER, Inc.
Office Number: 02 9130326
Mobile Number: 09178867286

"The tax policy of Gloria Macapagal-Arroyo is becoming more and more regressive. The ordinary wage-earners are being taxed more compared to local and foreign big business and is clearly geared against the poor of this country."

This was according to Mr. Paul Quintos, Executive Director of the Ecumenical Institute for Labor Education and Research, Incorporated or EILER, Inc. Based on the data gathered by EILER, Inc., the ordinary Filipino bears the burden of paying more taxes.

"Since President Arroyo assumed power in 2001, the ordinary wage-earners are increasingly being taxed more compared to the business sector. In the year 2001, P75.19B came from wage-earners, while P147.3B came from the business sector," added Quintos. "But in 2003, contributions from wage-earners increase to P121B or an increase of 61% from the previous level, while contributions from the business sector decreased by 17%."

Comparison Between Individual Income and Business Taxes (in PhP Millions)

Income Tax on Business
2001 - 147,334
2002 - 110,800
2003 - 122,101

Income Tax on Individual
2001 - 75,195
2002 - 102,300
2003 - 121,077

Source: Basic data from the NSCB "National Accounts"

"The divide further widens when we compare the percentage of taxes paid by ordinary Filipinos to big multi-national corporations (MNC) which enjoy generous tax breaks and other incentives from the government," opined Quintos.

Based on the EILER research, Fujitsu Philippines, a Japanese electronics company, pays a measly .6% of their gross income in 2001, while Toshiba Information Equipment, paid an even lower amount of .05% of their gross income in the same year.

"While in 2001, an average of 8.2% of the gross income of ordinary Filipinos are being eaten away by taxes, this big MNC's are not even paying 1%," asserted Quintos. "Those who earn less paid more, while those earning billions paid less. Now that is what we call a regressive tax policy."

In 2003 alone, the government's foregone revenues due to VAT exemptions – which benefit big corporations most of all – amounted to P195 billion or more than twice the expected additional revenues to be raised by increasing the VAT rate to 12%.

Mr. Quintos added that such a dire situation for ordinary taxpayers, are bound to go from bad to worse when the additional VAT is implemented. ##

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