Legislators bared on Sunday a softening of the hardline stance Malacañang has taken against the proposal to scale back the country’s income-tax structure, saying that fiscal policy-makers—who earlier put their collective foot down on reducing the personal and corporate income-tax rates—agreed to take a fresh look at the reform measures.
Lead tax-reform proponents at the House of Representatives and the Senate said the Department of Finance (DOF) is reconsidering the tax-reform proposals advanced by the legislative leaders.
House Committee on Ways and M eans Chairman and Liberal Party Rep. Romero S. Quimbo of Marikina City and Senate Committee on Ways and Means Chairman Sen. Juan Edgardo M. Angara said legislators
now wait for word from the DOF on the tax-reform measures. “The DOF was tasked to study further [the measure reducing the individual and corporate tax rates, and assess their] impact,” Quimbo said.
Previously, the DOF warned lawmakers that reducing the individual income and corporate tax rates will cause the government to lose tax revenues equal to 1.5 percent of the country’s gross domestic product (GDP), or P30 billion.
This was why Malacañang, taking the cue from the DOF, rejected the long-pending bill mandating adjustments in individual and corporate income-tax rates, saying the government “cannot put our fiscal sustainability and credit rating at risk by doing piecemeal revenue-reducing legislation.”
But following several calls to scale back the individual and corporate tax rates, President Aquino last Thursday met with reform proponents Quimbo and Angara to convince the Executive on the merits of their reform proposals.
According to Angara, he and Quimbo presented before President Aquino “various arguments and reasons for the reform, from the level of individual households at the microlevel and the benefits to society and the economy at large.” “We also emphasized that the real incomes of regular employees had been eroded since 1997 when the tax code was enacted into law,” Angara said.
The Philippines owns the second-highest personal income-tax rate in the region at 32 percent, next to Thailand and Vietnam’s 35 percent, and the highest value-added tax rate of 12 percent as the country’s individual income-tax bracket has remained unchanged since 1997. The House version of the measure seeks to recast the income tax for compensation-income earners, the self-employed and professionals, as well as corporations through simplification of tax tiers and rates while relating these to inflation. Under the bill, public and private workers earning P180,000 and below will be completely tax-exempt.
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 P500,000 and above P500,000 to P10 million from the current 30 percent to 9 percent and 17 percent, respectively.
It also provides that a 30-percent tax will be paid by those earning P10 million annually. Currently, those with yearly earnings of P500,000 and above pay 32-percent income tax. The measure will also reduce the corporate income-tax rate from 30 percent to 25 percent.
3 comments
TAX REFORM NOW!!!
Unfortunately tax reform is not a Pnoy priority and definitely not an LP priority.
When Gibo Teodoro was talking about taxes back during the 2010 elections, our so-called intelligent voters just shrugged him off as a GMA lackey, and proceeded to vote for Pnoy solely for his “walang corrupt, walang mahirap” anti-corruption platform.
The rest is history. And as with all democracies, we all get who the myopic majority votes for.
Unfortunately tax reform is not a Pnoy priority and definitely not an LP priority.
When Gibo Teodoro was talking about taxes back during the 2010 elections, our so-called intelligent voters just shrugged him off as a GMA lackey, and proceeded to vote for Pnoy solely for his “walang corrupt, walang mahirap” anti-corruption platform.
The rest is history. And as with all democracies, we all get who we collectively vote for.