MANILA - President Aquino has thumbed down proposals by his
allies in the legislature to lower income tax rates, saying it may create an
adverse affect on the country's economy.
The President fears that lowering income taxes may result to
an inflated deficit since there will be reductions in the country's revenue.
A bigger deficit may in turn have a negative factor when
credit rating agencies start to evaluate the country's economic performance.
He added that one suggested probable move to avert effects
of lowering income taxes would be to increase the value added tax (VAT), which
in turn will hit the income of all classes of society.
Aquino cited a possible increase in price of oil that may
eventually affect cost of services and products.
So whether this move of lowering the income tax levels would
be beneficial, the President is not so convinced. He said it could be
reconsidered if there was a budget surplus, but given the current financial
conditions, he said the country cannot afford to lower any taxes for that
matter.
- The President said lowering income taxes may also go against the progressive taxation for which the constitution requires, which means those who have more should pay more, and those who have less should pay less, but the effects of lower income taxes maybe otherwise, and may hit the incomes of even the smallest income earners in the country.
Source: Agency
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