TRANSCRIPT OF KAPIHAN SA MANILA BAY
PART 1

Senator Juan Edgardo "Sonny" Angara: As you know, the President rejected the income tax proposal last Monday when he led the inauguration of the Iloilo Convention Center in Iloilo City. And he said a few things which I agree with and some of which I don't agree with. First of all, yung sinabi niyang mahirap pumasan ng EVAT na kailangang pantakip dun sa P30B reported losses from the income tax cut which will benefit 5 million. Yung pagtaas ng EVAT, mas maraming maapektuhan. I agree with that. That's true. Pero, nagtataka ako dahil yung EVAT, wala namang nag-push nun sa Kongreso. So, that only had to come from Sec. Purisima and Commissioner Kim Henares. So talagang, parang kumbaga, I don't want to use the word "brainwash," maybe a slightly less strong word na in-inculcate talaga kay Presidente na, "Pag nagbaba tayo ng income tax sir siguro kailangan magtaas tayo ng VAT."

Parang naging condition, which I don't agree with. And I was proven right on many occasions sapagkat - kahapon nag-budget hearing kami ng Dept. of Finance. The DOF family includes BIR. Naroon sila Sec. Purisima, Commissioner Henares, Commissioner Lina, the national treasurer, Mr. Tan, and the other agencies. At ang hinihingi nilang budget for 2016 sa Kongreso ay P50B.

Tinanong po natin, "Magkano po ba ang budget ninyo this year (2015)? P15B. So, an increase of P35B." Narito po yung current year's budget ng DOF family - nakalista po yung agencies: Office of the Secretary, Bureau of Customs, etc. Now what they want for 2016 - P50B from P15B. That's an increase of 220%. And yet, hinindian nila yung tax reform.

Ang kompromiso nga po natin huwag na babaan yung rates. Ang gawin natin, i-index to inflation na lang. Ano ang ibig sabihin ng index to inflation? Ang ibig sabihin, ang piso noong 1997, now if accounted for inflation is worth P2.25. So, ang ibig sabihin, yung P100,000 noong 1997 is now P225,000. So kung ano ang binubuwisan ng P100,000 noong 1997, ang binubuwisan dapat niya dito is P225,000 dahil kung hindi, lugi naman yung taxpayer. So yung P500,000 noon, obviously is more than a million now. Same rate. Yun ang kompromiso, pero ayaw pa rin.

And yet, yung ahensya ng gobyerno, they're asking for a 224% increase. And the biggest item in terms of percentage increase comes from the two officials who are most vocal against giving tax reform, even the mere indexation dun sa milyun-milyon nating empleyado. Office of the Secretary, 182% -- from P900M to P2.6B and BIR, from P7.9B to P11.3B or an increase of 41%.

Sabi ni Commissioner Kim, "Kailangan namin ng new building." Okay lang yun, pero ginagastos nyo ang pera ng bayan para sa pansarili niyong interes, para sa pansariling interes ng inyong ahensya. Huwag nyo namang ipagdamot yung pera para sa milyun-milyong Pilipino because if you break it down to five million taxpayers, it's as little as P800 a month for a public school teacher for instance. Kahit paano mararamdaman niya yun. Yung indexation ng taxes. Yun ang puntos natin kaya sinabi natin, "Baka si Presidente, hindi niya nakikita yung buong picture - dahil hindi naman ibinibigay sa kanya itong information." So, I think pag sinasabing walang pera ang gobyerno o madedehado ang gobyerno kaya kailangan may kapalit yan, I don't think so.

Yung biggest item nga pala dyan ay itong P10B and P20B for Development Bank of the Philippines and Land Bank of the Philippines. Ito ay subsidy to the two banks for their capitalization para mag-increase. According to them, it's to comply with regulatory requirements of Basel 3 - these are the new worldwide financial requirements. Pero nung tinignan naming yung financials - ang point ni Sen. Recto dyan, who is the chairman of the subcommittee hearing the budget - his point was, "Why do we need to do this right now? Mas urgent yung tax reform because the people are having a hard time paying their bills, di ba?" Tapos narito po tayo, inuuna natin yung malalaking bangko na clearly are very profitable - both Land Bank and DBP are among the top 10 banks in the country. So, kumikita po yan.

So, sa akin, konting pagiging sensitibo naman sa ating mga mamamayan. Konting malasakit man lang. Sana ibahin natin ang ating mindset na gobyerno, gobyerno, gobyerno. The government can do a lot. But I think the private sector can also do a lot on its own. At kung bibigyan mo ng iilang libo lang ang bawat pamilya, sigurado gagastusin naman nila yan. Iikot din ang pera sa ekonomiya.

Q: Ano ang sinasabi ng private sector especially the business sector on your proposed bill?

SJEA: Well, slowly, it's gathering support. In fact, yesterday, ironically nag-issue ng statement na totally unrelated ang JFC (Joint Foreign Chambers). Sabi nila, the Philippines has some of the highest taxes in the region. At doon naman sa pahayag ng TUCP, nagalit sila dahil sabi, "Bakit nire-reject yung para sa mga pro-workers?" So this is an issue na nagkaisa ang business and labor. Nagsalita na rin si VP Binay na suportado nya ito. Nagsalita na si Sen. Pres. Drilon na kailangan nang i-index yung ating taxes from 1997 dahil hindi umaakyat ang halaga at talagang natatali roon ang ating mga trabahador. Nagsalita na rin si Speaker Belmonte. The speaker supports the indexation at the very least.

Q: Eh kasi house initiated ang tax measure.

SJEA: Yes.

Q: Can you just explain to us your proposed bill? Your own version. Kasi as far as I know, there is a version over the corporate income. But the individual income tax, mas open daw ang Palasyo. Can you discuss to us what the Angara bill is all about?

SJEA: I also have a proposal to lower corporate income taxes at 25%. I filed them separately. Pero ang inuuna ko, ang talagang itintulak po natin, yung sa individual income tax. Those who are fixed income earners or those who are subject to withholding income. You're talking about 4-5M individuals. So pag sinabi mong kalahati roon ay pamilyado, you're easily talking about 10M or 7-10M people. At ang gusto natin originally was to lower taxes across the board, kasi yun ang ginagawa sa Southeast Asia. Pero since sabi nga ng DOF, malulugi ang gobyerno, sabi ko, "Sige, indexation na lang tayo. Tsaka na natin pag-usapan yung lower income rates."

Q: Right now, I am being withheld at 32% tax. And that is almost 1/3 of my income. Wala pa yung SSS at yung iba pang deductions.

SJEA: In fact, in other countries, they call those payroll taxes. So buwis din ang turing. Sa SSS, sa PhilHealth, sa PagIbig - those are considered a form of taxes too. Pag dinagdag mo dun - if you have 32 percent on your income -you probably have maybe close to 40 percent.

Q: When you say indexation, nire-revise mo ngayon ang proposed bill mo? Kasi ang original bill mo is to reduce the tax rates. From 32-27%?

SJEA: 25% over a period of three years naman.

Q: When you say indexation, you have to amend your bill --

SJEA: Hindi. It's okay because there are many bills anyway. So we should come up with a consolidated version.

Q: So right now, wala pa yan sa bill mo - indexation?

SJEA: We cannot release it from the committee. As you mentioned, all revenue measures or tax measures must originate from the House of Representatives. That's the provision of the Constitution.

So, like in your case Marichu, you're earning at least P500,000 taxable income a year because you are at 32%. So yung P500,000 level to be considered na 32% level, kelangan baguhin natin and taking into account inflation. So kung ang base mo P500,000 that's equivalent to x 2.25. Yun yung factor of inflation. So you're talking now - siguro nasa 1.2 million pataas. Yun lang ang ita-tax ng 32 percent.

Q: You were telling us a while ago over the table, you have BIR Commissioner Kim Henares saying, "Bakit natin kelangang bigyan ng ganung relief tax ang income earners when they can spend it abroad when they go abroad." Can you just expound on that?

SJEA: I think medyo na-understimate ni Comm. Kim yung impact sa pangkaraniwang tao. Siguro, ang iniisip niya, yung upper end of the spectrum. Kasi malaki o malawak ang definition ng middle class. You're making anywhere from P80,000 to P800,000. That's how big the definition of middle class is. So, siguro yun ang iniisip niya. Yung kumikita ng P800,000. But you're also talking about people who are not minimum wage earners and are only earning slightly more than minimum. Ang minimum wage is about P481 in Metro Manila kada araw. So, i-multiply mo ng 20 - we're talking about P9,800 something like that. So anyone who makes more than that will be affected. If P11,000 ang sweldo mo - kasama dyan yung mga naglilinis sa Senado, yung mga driver, yung mga mensahero. Apektado sila ng tax reform natin. So huwag nating isipin na ito'y tax reform para lang sa mga may kaya.

Even assuming that we're talking about upper middle income earners, ito yung sektor na hindi nila nararamdaman yung taxed peso nila. Dahil kung sumakay man sila ng MRT, masikip. Do they send their kids to public schools? Hindi. They have to pay private school tuition. So, pag sinuma-total mo yung mga gastusin nila, hirap na hirap talaga sila. I have real examples of people making as much as P60,000 kaso they cannot make ends meet so mag-o-OFW na lang sila. They would rather work two jobs at a lower level. We are talking about college graduates. Magtatrabaho na lang sila sa grocery sa umaga tapos sa hapon hahanap sila ng ibang raket. And still, they are making more and taxed less than here in the Philippines.

Very short term ang pananaw ng ating revenue officials. They're just looking at it, year to year, wanting to meet their targets - which are self-imposed actually and are not set scientifically. So, medyo short term lang talaga ang pananaw. Hindi tinitignan yung pang-malawakang epekto sa ating ekonomiya at sa ating mga trabahador.

Q: Other than tax relief, hindi ba may iba pang tax measures na - sa customs naman related?

SJEA: The Customs Modernization Law. Nakita natin na kung may outdated laws tayo sa income tax - dated 1997 - we even have more outdated laws sa Customs. For example, ano yung minimum amount that you can bring through Customs.

Alam ba ninyo na everytime mag-a-abroad kayo at pagbalik ninyo you bring home something that is more than P10 that is taxable already? So, bumili lang tayo ng tsokolate, bumili lang tayo ng isang bote (ng alak), that's taxable already. So, there is so much discretion on the part of the Bureau of Customs when they see people coming. Pwede nilang piliin kung sino ang type nilang buwisan. Because everyone, theoretically, is subject to tax. So, gusto nating i-update yung amounts. Tapos nakita natin dito sa gulo tungkol sa Balikbayan boxes na very small talaga ang amount na pinapayagang iuwi ng isang OFW. It's P10,000 - if you're a returning resident. Nagtrabaho ka sa abroad, naging OFW ka, nagkaron ka ng buhay and you're only allowed P10,000 tax exempt. Everything else is taxed. So, yun talagang outdated yun. Talagang kailangan nating baguhin yun.