Philippines Presidential Bets Split On Taxes As Campaign Heats Up

MANILA -- The Philippines’ top three presidential candidates diverged on a push to lower income taxes as the race to take over from President Benigno Aquino III heats up. Aquino's successor will inherit a country with fast growth, high unemployment and an intensifying sea dispute with China.

The Philippines has a corporate income tax rate of 30 percent and a valued-added tax (VAT) rate of 12 percent, the highest rates in Southeast Asia. Its top personal income tax rate is 32 percent, among the highest in the region. Lawmakers pushing for changes also point out that that top rate is levied on anyone making 500,000 pesos ($10,600) a year or more. That was a lot of money in 1997, when the threshold was set. Now, 40,000 pesos a month is what some junior executives and many supervisors with just five years of experience earn, according to data from the country’s biggest job search website. That means they’re paying the same rate as the country’s best-paid executives.

“Rest assured, I will bring down income taxes of salaried people,” Vice President Jojo Binay, the No. 2 candidate in the polls, said in a televised radio interview. He said he would keep Aquino's finance secretary, Cesar Purisima, ignoring Purisima's stance against changing income tax laws.

“I am open to lower corporate income tax,” Sen. Grace Poe, the front-runner, said without elaborating, in a televised forum just hours later.

'It Becomes Very Politicized'

“I am open to reviewing tax reform. I don’t think it should be discussed during election period,” former Interior Secretary Mar Roxas said at the forum. “It becomes very politicized, it becomes pa-pogihan (pandering). So let’s just not pay any tax. It will be a dive to the bottom. I don’t think in a heated political environment that you could have a rational debate about taxes.”

“How are we going to support the infrastructure that this same crowd wants to happen?” Roxas asked the audience composed mostly of business executives. "How are we going to support the education that we all want to happen?"

Roxas' position on taxes may not help him improve his chances. An October survey showed his popularity little changed at 21 percent while Binay rose 5 points to 24 percent and Poe surged from 26 percent to 39 percent.

It’s unclear whether Roxas or Binay has the stronger political organization. Roxas has been in government since the 1990s and has the backing of President Benigno Aquino. Binay and his family have ruled Makati since 1986 and used the resources of the country’s richest city to help needier local governments, earning the loyalty of many political leaders around the country. He and his family are now facing corruption investigations. He brushed them off Wednesday as a "demolition job."

Poe’s government experience -- and network -- is limited by her three years as head of the movie and TV ratings agency and three years as senator. She admits her popularity is due to her late movie star father, Fernando Poe Jr., who ran for president in 2004 and is widely believed to have been cheated in the election. She faces possible disqualification due to citizenship and residency issues stemming from being an adopted child and having lived in the U.S. from 1989 to 2005 -- studying in Boston College, starting her family in Fairfax, Virginia -- and even taking American citizenship from 2001 to 2006.

Binay on Wednesday said Poe should be disqualified. Earlier in the week, a popular mayor from the southern part of the country, Rodrigo Duterte of Davao City, said he may run so that "an American" doesn't win.

Manila's Traffic

The elections are in May and the winner takes over from Aquino in June. The current president will depart because of term limits.

Binay said he’d organize a special department focused on fixing Manila’s traffic jams. Roxas said he would "abrogate" a 1990s contract for Manila's main commuter rail, so the government could take it over completely. Manila has the worst traffic of any city in the world, according to Waze, making it a campaign issue.

Earlier on Wednesday, Roxas said he would reduce the number of bus companies on EDSA, Manila's main thoroughfare, to one, as it is in many cities around the world, from well more than 100. That should eliminate the incentive for bus drivers to linger at bus stops, competing with each other for passengers, and causing traffic to pile up behind them, he said.

The candidates also spoke about the country's South China Sea dispute, over which the government has taken China to court, and whether or not to join the U.S.-led Trans-Pacific Partnership. Some economists say the Philippines needs to relax foreign investment rules and join the TPP to attract the investment needed to reduce 6.5 percent unemployment and 21 percent underemployment, which forces millions to leave their families to work abroad.