Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said taxing people based on their consumption is better than taxing them based on their income.
In a Laging Handa briefing on Friday, Diokno reiterated his earlier stand on the issue, saying “it’s better to tax people on the basis of what they take away from society, consumption, rather than what you contribute to society which is your income.”
“So maganda talaga ‘yung value-added tax,” he said, referring to the measures to tax digital transactions and the rich.
Last month, the House of Representatives approved on final reading House Bill 7425, which slaps a 12 percent VAT on digital transactions to help boost government revenues.
Diokno said lawmakers are now pushing for this measure but pointed out that it is better to exclude from this bid small value transactions to encourage people to further use digital modes for their financial transactions.
“In general, I think VAT is a good tax but exclude the small transactions, say those less than PHP500,” he said.
The BSP has been promoting the use of digital transactions, which got a boost during the pandemic due to movement restrictions imposed by the government. It targets to further increase the share of digital transactions to half of the total by 2023 from about 20 percent in 2020.
This goal is backed by several programs such as the increase of payment operators that offer electronic financial services and the lowering of transaction fees.
BSP has instituted two electronic payments facilities — PESONet and InstaPay — under its National Retail Payments System (NRPS).
Monetary authorities said the volume of PESONet transactions totaled to around 31.6 million in the first half of 2021, up by 164 percent year-on-year.
Similarly, InstaPay transactions during the same period jumped by 223 percent to 201 million.
To date, there are 87 financial institutions that are providing PESONet service while 55 financial institutions have InstaPay service. (PNA)