Asia Tax Reforms: Lower income taxes, higher consumption taxes

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Citizens in several parts of the world are bracing for higher prices as a number of governments have moved to raise taxes on goods and services. In the Philippines, revenues from the new taxes are expected to fund a massive infrastructure projects. But the spikes are also fueling concerns about how it will hit poor Filipinos. CGTN's Barnaby Lo has more.

Diane Oliveros' day starts at five in the morning. She has a small neighborhood store where she sells food and household products. She doesn't make much, she says, but the money augments the minimum wage income of her husband.

DIANE OLIVEROS "Instead of relying only on the monthly salary of my husband, I thought of opening a small business. Now we don't borrow money to make ends meet anymore."

Diane fears they may have to revert to loans again soon though. That's because fuel prices have risen sharply since January, shortly after the government implemented a new tax law. The law exempts most of the salaried middle class from paying income taxes, but imposes more excise taxes."

BARNABY LO MANILA Minimum wage earners are not affected by the Philippines' new income tax table because they've never had to pay income tax anyway. But the new tax law also increases taxes on goods, and that's what worries poor Filipinos.

To address that concern, the government says it will be providing poor families with a five-dollar monthly stipend. Officials also insist price hikes will be tolerable.

CARLOS DOMINGUEZ III FINANCE SECRETARY "Our analysis shows that the overall inflation might be increased by seven tenths of one percent due to higher oil prices in 2018, of which food prices may increase by up to three tenths of a percent, and transportation will be up probably one tenth of a percent."

The Duterte administration says tax revenue will be used to fund long overdue infrastructure projects. In fact, all over Asia, governments have been pushing for higher taxes on goods and services to energize their economies.

ALVIN ANG ECONOMIST "It's easier to collect from consumption than from income, right? People can always find ways to make their income look small."

Of course, that was never a concern for millions of Filipinos like Diane who make barely enough to make ends meet. Their concern now is how to make their income not only look bigger, but actually grow bigger. Barnaby Lo, CGTN, Manila.