Increase in excise tax is not sound – Taguiwalo


BAGUIO CITY–The former secretary of the Department of Social Welfare and Development (DSWD), in an interview Monday said, there would be no need for the unconditional cash transfer (UCT) if there was no increase in the excise tax as per the Tax Reform for Acceleration and Inclusion (Train).

Judy Taguiwalo, former DSWD secretary said it would be better to scrap the increase in excise tax rather than going through too much trouble distributing P200 per month to the identified 10 million poorest of the poor families.

It can be recalled that due to expected increase in prices of basic goods and services with the implementation of the Train law, DSWD is tasked to give  the 10 million poorest families in the country a P200 monthly subsidy to cushion the impact.

Unlike the Conditional Cash Transfer (CCT), Taguiwalo said that as mentioned in the program’s name, the UCT has no conditions.

According DSWD UCT beneficiaries will receive P2,400 to cover the P200 per month grant for 2018 but the amount will be increased to P3,600 or P300 per month for 2019 and 2020. Funds will come from the increased excise tax collection.

“Even if you deduct the funds for the the UCT from the excise tax collection, government will still earn big, which will be used for its build build build program,” she said.

“But build build build projects will actually also get funds from foreign loans,” she added.

Taguiwalo said that the distribution alone of the UCT will be a “nightmare” like what they are encountering in the distribution of CCT. She said that many areas still do not have conduit banks.

Taguiwalo further said that DSWD’s list of 10 million poorest of the poor families will have to be reconciled with the list of the local governments. “This will make the UCT vulnerable to patronage politics and corruption,” she said.

Train law anti-poor

Taguiwalo said while the decrease in income tax is a very welcome development from the Train law, the increase in excise tax hurts the poor the most.

“We welcome the decrease in income tax as it has been long overdue but to increase the excise tax to compensate the decrease in income tax is not sound,” Taguiwalo said.

“The idea that increase in excise tax is fair because it impacts everyone both rich and poor is wrong because a closer look would show that it impacts the poorest of the poor the most,” Taguiwalo added.

Taguiwalo said the rich who own business corporations will just pass on their additional production expenses to their consumers. “Who are the end consumers? They could not pass on the additional costs to anybody,” she added.

Taguiwalo said the poorest of the poor do not benefit from the decrease in income tax because they do not have enough income to start with. She added that even the decrease in income tax will not be felt because of the increase in prices of basic goods and services due to the increase in excise tax.

Taguiwalo said that government should come up with a taxation scheme that will tax the rich more and the poor less.


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