THE leadership of the House of Representatives has vowed for the passage of the measure lowering income-tax rate for individuals this 16th Congress.
Speaker Feliciano Belmonte Jr. said that, after the passage of a measure seeking to increase the tax-exemption ceiling of the 13th-month pay and other bonuses from P30,000 to P82,000 in Congress, lawmakers are now studying all the measures in the Lower House that seek to lower individual income-tax rate.
“[However], it takes us [House] a time to work on the income tax, but it’s true that we really need to amend our tax law…. I agree that we should lower the tax rate,” Belmonte said.
Liberal Party Rep. Romero Quimbo of Marikina City, chairman of the House Committee on Ways and Means, has said that the House, particularly his panel, has already started working for the passage of the bill lowering income-tax rate for individuals.
Quimbo said this tax measure will be prioritized in the chamber, and will be passed before the second regular session ends in June 2015.
He said the bill lowering income-tax rate for individuals will be out in his committee by March next year.
“Our next battle [in the House of Representatives] is lowering income tax for individuals,” Quimbo said.
The lawmaker added that the current income taxes imposed on individuals have become uncompetitive and unresponsive.
“Our tax system’s failure to keep in step with global corporate trends and to adapt with rising inflation rates must be resolved,” Quimbo said.
Quimbo’s House Bill 4829 is among the 14 pending bills that seek to restructure the income taxes imposed on individuals.
He said that since the effectivity on January 1, 1998, of the National Internal Revenue Code of 1997 (or for 16 long years), the levels of taxable income brackets have been pegged at the 1998 Consumer Price Index (CPI) of 67.8 percent, which is starkly less than half of the present CPI of 137.7 percent.
As the income of salaried individuals is increased to keep it on a par with the rising inflation, they are pushed into higher income brackets, and, thus, are compelled to pay more taxes than they should, according to him.
His bill proposes a flat rate of 25-percent income tax on self-employed individuals and professionals; a 5-percent minimum income-tax rate on self-employed individuals and professionals; reduction of the corporate income-tax rate from 30 percent to 25 percent; and increase of the minimum corporate income-tax rate from 2 percent to 5 percent.
While he supports the moves decreasing the income-tax rate, House Majority Leader and Mandaluyong City Rep. Neptali Gonzales II said Congress should study the measure carefully.
“We should first consider how we will get back the revenue that will be lost from reducing income taxes,” he said.
Earlier, Finance Undersecretary Jeremias N. Paul Jr. warned lawmakers that reducing the individual income-tax rates may cause the government to lose revenues totaling as much as 1.5 percent of the country’s gross domestic product, or P30 billion.
“We need to have a compensating measure. It has to be revenue-neutral,” Paul said.
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