Transcript of interview with Senate President Pro Tempore Ralph Recto Re Tax Reform bill

Q: Duterte certifies as urgent the tax reform measure...

Recto : I suppose the House will probably pass it on 2nd reading tonight and probably 3rd reading tomorrow, but I expect long debates in the Senate.

Q: With the certification of the Pres, isn't it unusual if the Senate will fail to act on it?

Recto: No, because the Constitution provides that the House first pass the measure. We cannot tackle any revenue measure here without the House passing it first. Any tax measure must emanate from the House. Once they passed it, then it is up to the Senate now to consider the proposal. There's nothing yet in the Senate to speak of.

Q: Di kayo mag hearing during the break? Unlikely?

Recto: Unlikely, but that's for the chairman to consider.

Q: Doesn't that make the Senate the bad guy in the eyes of Malacanang?

Recto: No. There's a procedure to follow. Eto (certification) para mawala lang yung 3-day rule.

Q: Ano yung contentious issues na nakita mo dito?

Recto: Marami. First, the budget this year that was appropriated, nagastos na ba or hindi? May problema pa rin ba sa absorptive capacity? Meaning to say, if they cannot spend the budget, why ask for more taxes?

Two, the proposal essentially is that we give P200B in income tax reform to your right pocket, and I will pick your left pocket with P500B, para may netong P300B. That might be too much.

Third, oil prices will go up by P6 per liter. In their proposal, it is P3 (additional per liter for the 1st year), P2 (additional for the 2nd yr), P1 (additional for the 3rd yr). Hindi ba pwedeng P1, P1, P1, P1, P1, P1 (one peso per year spread out to 6 years)?

And then what are they lifting? How many laws are we repealing? How many laws are we amending, as far as the VAT exemptions and other special laws are concerned?

The other is wala bang burden sharing? Meaning to say, we raise P150B for you. On your own, if the executive plug the leaks, can you raise P150B by yourself? Why put the onus to the taxpayers? Remember, government is a monopoly. The easiest way out is to raise taxes. What about all the taxes that we gave you already that you are not collecting? So iyon yung burden sharing. Magpakita naman kayo (gobyerno) ng gilas before we raise taxes also.

Q: Is the situation dire now?

Recto: No, there is no fiscal crisis today. Very different from the early 2000s when we had to act immediately. No fiscal crisis.

Q: No fiscal crisis. How about the next 2-3 years, may nakikita ka?

Recto: Wala, wala. You know I don't mind borrowing money for as long as we use that to good use. Meaning to say, while rates are very low, halimbawa, if you borrow at 2% cost and you grow by 6% may gain tayo na 4.

Q: I think ayaw nila ipagalaw yung package nila eh. Based on what I hear, parang naka-chop-chop yung sense yung sa committee ni Sonny. Naka-chopchop, nakahiwalay yung bill ng income, yun ang direction. Ayaw ipagalaw ng executive.

Recto: I'd rather look at it as one. Remember sila, marami sila - may part 1, part 2. Why have several pregnancies when we can do it in one? As far as I'm concerned, why? So that we see the total picture, we don't lose sight of what we're doing. Once you have too many packages, iba yung debate dyan, and then we move on to the next debate. But there's a comprehensive way of looking at everything. What is the total revenue? What is the total giveaway that we're doing? How much are we getting back from the taxpayers?

Pangatlo, is there a better way of doing it? Halimbawa, there are so many people that are exempted today from income tax. So why are they exempt? Eh di 'yun ang unahin natin, yung exempted. Why should we keep on taxing those who are paying, and leave out those who are exmpted? So that's another way of looking at it.

Isa pang halimbawa, yung mga income tax holidays. We've identified already something like 200 billion of redundant incentives sa holidays. Eh di yun na muna.