The Department of Finance (DoF) said that the national government is expected to raise P73.92 billion from increasing value-added tax (VAT) rate to 15 percent, reducing corporate income tax (CIT) by 2015.

Data from the finance department showed that the next administration could raise the present 12 percent VAT rate gradually to 15 percent until 2013, and cut other taxes, such as corporate and personal income tax to 25 percent.

Finance Secretary Margarito B. Teves, whose term finishes on June 30 this year, said the decision on raising VAT from 12 percent to 15 percent will now depend on the next administration and Congress, adding they can only recommend measures aimed at sustaining fiscal sustainability.

“We have to offer them alternatives. For example, you did not go straight to 15 percent, you can do this gradually at the same time you can also calibrate the reduction of individual and corporate income tax,” Teves said.

Teves has recommended the next Congress approve bills to rationalize fiscal incentives, restructure excise taxes on tobacco and alcohol products and simplify net income taxation.

These three reforms would generate P33 billion in the first year of implementation, he said, adding increasing the VAT rate and reducing corporate and personal income tax could initially be revenue neutral.

“Depending on the formula, you can have a neutral impact in the beginning. But with a more efficient way of handling it, you can have a positive effect in the end or as we go along,'” Teves said on the impact of a VAT increase on revenue.

After suggesting raising VAT to 15 percent, Teves is also urging the next administration to pursue the privatization of government assets that “are best left to private hands.”

Teves said the government is facing an economic environment that requires more resources for accelerated infrastructure development and better social services within a “constrained budget envelope.”

This year, the government has programmed P30 billion revenue from the sale of three state-assets scheduled in the first-semester of the year.

These three government-assets up for sale are the 130-hectare Food Terminal Inc. complex in Taguig City, lease and development of the Fujimi property in Tokyo, Japan, and the 10 percent stake in Malampaya Deep Water Gas to Power Project.

The DoF chief also appeal to the next congress to review VAT exemptions to determine whether objectives for exemptions have been met and other ways can be more effective to achieve them.

“We believe that this should be done as a package of tax reform measures, together with our proposal to rationalize fiscal incentives,” he added.