Fiscal (Tax) Policy Wishlist

Income tax. Maintain as progressive as mandated by the Constitution using the bracket and exemptions system. The minimum personal income tax should still be at 5% but the maximum should be lowered to 25% to increase compliance of professionals. The brackets should be adjusted to match the inflation rate and should be automatically readjusted every 3 years to minimize income erosion. The corporate income tax should match the highest personal income tax rate at 25% to be competitive with other Asean states. The personal exemptions should be adjusted based on the cost of living.

Value-added tax. Lower back to 10% from 12%. Broaden the tax base by including more products to lessen tax burden but do not levy on public market, informal sector and similar settings to act as exemption. Income and consumption are good for the economy so they should not be taxed heavily.

Excise tax. Maintain most rates but continue broadening the tax base. Sin tax should also include sugar, salt and fat taxes which should be levied on manufactured foods and drinks if they surpass a certain level of added sugar, sodium, or saturated and trans fat. This is to encourage production and consumption of healthier products. The minimum by value excise tax on automobile should be increased from 2% to 10%. There should be a by volume excise tax on automobile based on length with the minimum rate at 10% of the value. This is to discourage purchase of cars which add to traffic and to encourage use of public transport.

Payroll tax or contributions to social security, health insurance and home fund. These are flat rate or progressive bracket-based taxes but with caps and no exemptions thus effectively regressive. To simplify, increase compliance and be constitutional, levy a low flat rate tax with exemption and no cap. The social security contribution should be lowered from a nominal rate of 11% to 6% shared equally by the employer and employee; the health insurance from 2.5% to 2% shared equally; the home fund from 4% to 2%. The lower rates will be compensated by removing the caps. The exemptions should be based on the cost of living automatically adjusted every 3 years so cost of living income individuals does not need to contribute but are still covered.

Community tax or cedula. It is a head tax plus a flat rate tax with a cap and minimal exemptions thus effectively regressive. This should be abolished as unconstitutional, ineffective and archaic.