MANILA - President Arroyo on Monday pledged to increase the government’s tax effort by plugging leaks, running after tax cheats and scalawags in revenue agencies, and new revenue measures that she urged lawmakers to pass.

In her State of the Nation Address (Sona), the President said that in her last year in office, her administration “will work to increase the tax effort through improved collections and new sin taxes to further our capacity to reduce poverty and pursue growth.”

Taxes, she stressed, “should come from alcohol and tobacco and not from books. Tax hazards to lungs and livers; do not tax minds,” she said.

But Senate President Juan Ponce Enrile, presiding at the Senate’s Monday morning session, signaled a not-so-receptive attitude in the chamber.

He said that “overtaxing the people might result in a rapid deterioration of the economy, and in massive poverty with its consequent adverse social and political repercussions.”

According to Enrile, “we need laws that will ease the heavy burdens on our citizens, business enterprises, and their goods and social services…the people are in need of concrete relief. They cannot take on any more additional tax burdens.”

In her Sona, the President said that revenue enhancement “must come from the Department of Finance plugging leaks and catching tax and customs cheats.”

She called on “taxpaying citizens and taxpaying businesses: Help the BIR and Customs spot them.”

She said revenues from the new sin taxes should be spent on health and education, specifically to fund the PhilHealth premiums of the poorest of the poor and build more classrooms and buy computers. The reaction from industry was one of full caution. Jesus Arranza, president of the Federation of Philippine Industries (FPI), said the President’s direction on the sin taxes should be reconsidered and should be pursued only after the Bureau of Internal Revenue and Bureau of Customs have done their best to plug the collection leakages. “Let’s exhaust first the other sources, like stopping smuggling, before we impose more taxes on tobacco and alcohol products.”

SNITS pushed

The President also called for the passage of the Simplified Net Income Taxation Scheme (SNITS), which rationalizes the country’s net income taxation system by limiting the tax-deductible expenses of self-employed taxpayers to those directly arising from their production of goods or rendition of services.

Transport Security Law

The President also urged Congress to pass the Philippine Transport Security Authority Law, immediate amendments to the Commonwealth-era Public Service Law, and the creation of a Department of Information and Communications Technology to better serve the $6-billion business-process outsourcing (BPO) industry that currently employs 600,000 Filipinos.

Senate President Juan Ponce, indicating a hardline stance against imposition of new taxes, wants Congress to instead craft “creative ways to stimulate and hasten the momentum of business and industry in the country.”

In a speech at the opening of the 14th Congress’ third regular session yesterday, Enrile also advised administration congressmen to set aside efforts to tinker with the Charter, warning that doing so could unleash “a political storm” the country can ill-afford at this time.

“Those who wish to stoke the fires of anger and dissent among our people should think deep and hard,” Enrile said. “To insist on treading on this dangerous [Cha-cha] path, is at the very least, a distraction from our important tasks, and at most, an invitation to a political storm our country cannot afford at this critical juncture.”

He reaffirmed the senators’ unanimous commitment to resist all moves to amend the 1987 Charter “in any manner that violates the very Constitution we have all sworn to uphold.”

The Senate President instead urged lawmakers get back to the task of lawmaking as plenty of tasks need to be done and completed to put in place meaningful reforms and better economic conditions amid a still-raging global financial crisis.

He warned that simply taxing the people more could lead to dire consequences much worse than just economic stagnation.

The Senate President prodded Malacañang and Congress leaders to instead reassess fiscal policies and economic objectives.

He noted that while economic and finance managers project a slight improvement in gross domestic product in the second quarter of the year, there are local and international financial institutions which claimed that recession would hit the country by the end of the year—which means, he said, the unemployment ranks would swell.