There is still a good probability that the bill lowering individual income-tax rates will pass the House of Representatives this Congress, even if it was not included in President Aquino’s priority list, the chairman of the House Committee on Ways and Means said on Monday.
“[House] members are now very favorable [with the passage of the bill lowering individual tax rates]. We have finished the TWG [technical working group] and it is now at the committee proper. We will take up this matter, along with other pending bills on revenue generation. This way, we will churn out a revenue-neutral set of measures,” Liberal Party Rep. Romero S. Quimbo of Marikina, the panel chairman, said in text message. His panel will resume deliberations on the tax-reform measures soon.
Party-list Rep. Jonathan de la Cruz of Abakada earlier said the passage of the bill lowering individual tax rates will stimulate the economy, as “the bill would give working citizens more buying power, which, in the end, would result in more consumption funds for business and other economic activities, which again would generate more government revenues.”
Party-list Rep. Terry Ridon of Kabataan said the tax-reform bill is a social-justice measure that can ease the burden of millions of workers around the country.
Party-list Rep. Antonio L. Tinio of ACT Teachers said the tax breaks for individuals, in the form of lower income tax, is one of the most effective measure to redistribute the gains of economic growth. Senior Deputy Minority Leader Rep. Neri J. Colmenares of Bayan Muna said even the Department of Finance (DOF) has admitted the country’s tax bracket should be adjusted.
“The DOF admits that it is right that the P500,000, which is currently taxable by 32 percent, needs to be adjusted, considering that this amounts to P2.6 million today, according to NSO [National Statistics Office]. We are overtaxed,” Colmenares said.
Deputy Majority Leader and National Unity Party Rep. Magtanggol T. Gunigundo of Valenzuela, one of the principal authors of the measure in the lower chamber, said the bill, if enacted into law, will definitely reduce the number of Filipinos who do not pay taxes, as lower taxes mean higher level of compliance.
According to Quimbo, the lower chamber will pass the tax measure this December. This will give the bill a good chance of getting passed into law this 16th Congress, which is set to end in June next year.
The Palace said President Aquino would consider the long-pending tax-reform measure once Congress has approved it.
Quimbo said, “Like I’ve said before, the President has always been supportive of a new tax system that’s more responsive and fair to the ordinary taxpayer. I am, of course, happy that the Palace has confirmed it. Their wait will not be in vain.”
The panel’s TWG has recently approved the consolidated bill lowering individual taxes.
Under the TWG-approved bill, individuals earning below P180,000 annually will be exempted from paying income tax. In the current setup, those earning P10,000 or less per month pay 5-percent income-tax.
The bill also reduces the income-tax rate of those earning above P180,000 to 5 percent. The highest rate—at 30 percent—will be paid by those earning P1.1 million annually, he said. The Philippines has the second-highest individual income tax rate in the region at 32 percent, next to Thailand and Vietnam’s 35 percent, and the highest value-added tax at 12 percent, as the country’s current individual income-tax bracket has remained unchanged since 1997.
Quimbo admitted that the government stands to lose P92 billion annually should Congress approve the bills lowering individual income tax. To recover these revenue losses, Quimbo said Congress would also approve revenue-generating measures, such as the bills raising excise tax on fuel, the fiscal incentives rationalization bill, the proposed Tax Incentives Management and Transparency Act, Customs Modernization and Tariff Act and Rationalization of the Mining Fiscal Regime, as well as the bill imposing specific tax on sodas and other sweetened beverages.