NTH CONGRESS OF THE REPUBLIC)
OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES,

HN. 4755

Introduced by Representative H, Harry L, Roque Jr

EXPLANATORY NOTE

‘Taxation is the lifeblood of the State, and the power to tax is one of the strongest of
all powers of government, However, consistent with the policy of the 1987 Constitution,
taxation must be progressive, The imposition of tax measures should reflect a balance of the

needs of the government and the people,

Recently, lawmakers have proposed the imposition of additional taxes. While the
intentions behind these taxes may be good ~ i.e, to support the government - it is unclear
whether the aim of these policies is necessary and reasonable, in light of the realities of
government spending. A look at the national budget would reveal that a significant portion of
government appropriations is unused every year. This unused portion shows that the
absorption capacity of the government is high, making the additional imposition of taxes

redundant, So long as the government can afford to spend on basic services and

infrastructure, any additional tax imposed on the Filipino people is oppressive and
unjustifiable, Similarly, the government should also focus on improving tax collection, While
the middle class are easily targeted by the government, many small, medium, and large

businesses escape from their tax burdens by failing to report their taxes properly.


The purpose of this bill is to set a threshold absorptive capacity and tax collection
ratio, while limiting the imposition of additional tax measures to be consistent with
government need,

any

H. HARRY L, ROQUE JR.


SEVENTEENTH CONGRESS OF THE REPUBLIC )
OF THE PHILIPPINES )
First Regular Session )

aaa eeNae Vis) 3 IVES.

Introduced by Representative H. Harry L. Roque Jr.

AN ACT REGULATING THE
IMPOSITION OF NATIONAL TAXES TO BE PROPORTIONAL TO.
ACTUAL GOVERNMENT SPENDING

SECTION 1, Short title - This Act shall be known as the “Ultimate Tax Reform
Act.”

SECTION 2. Absorptive Capacity Benchmark —For the purposes of this Act, the
Absorptive Capacity Benchmark shall refer to the percentage of unused appropriations of
the annual national budget divided by the total amount of appropriations available for any
given year,

SI

TION 3. Prohibition on imposition of taxes beyond threshold Absorptive
Capacity Benchmark — ‘The Department of Finance, in cooperation with the Bureau of
Internal Revenue and the Bangko Sentral ng Pilipinas, shall set a threshold absorptive
capacity benchmark, which is reflective of the sufficiency of tax collection measures. No
measures to impose additional or higher taxes shall be imposed so long as the threshold
absorptive capacity has not been met.

SECTION 4. Proportionality of new tax measures with tax collection ~ The
Department of Finance in cooperation with the Bangko Sentral ng Pilipinas, shall also set

a threshold collection rate for taxes, which is reflective of the sufficiency of revenue
3


collection by the Bureau of Internal Revenue. No measure to impose additional or higher
taxes shall be imposed so long as the threshold collection rate has not been met.

SECTION 5.Separability Clause, - If any provision is held invalid or
unconstitutional, the remainder of the law or the provision not otherwise affected shall
remain valid and subsisting,

SECTION 6. Repealing Clause, - Any law, presidential decree or issuance,
executive order, letter of instruction, administrative order, rule, or regulation contrary to
or inconsistent with the provisions of this Act is hereby repealed, modified, or amended
accordingly

SECTION 7.£ffectivity Clause. - This Act shall take effect fifteen (15) days after

its publication in at least two (2) newspapers of general circulation,

Approved,