The chairman of the House Committee on Ways and Means on Wednesday said the lower chamber is eyeing to pass the bill lowering individual income-tax rates in March.
Liberal Party Rep. Romero Quimbo, chairman of the committee, said the measure will most likely be approved on second reading before the House of Representatives goes on recess on March 19 as lawmakers are winding up the discussions on the tax measure.
Quimbo said his panel is now finalizing the substitute bill consolidating pending measures on lowering the individual income-tax rate and simplifying the country’s tax structure.
Quimbo, however, warned that the Department of Finance and the Bureau of Internal Revenue have jointly launched a lobby drive to veto the bill increasing to P82,000 the tax exemption ceiling for the 13th-month pay and other bonuses.
“I’ve [received information] that the DOF, BIR are lobbying for the President to veto the bill raising tax-exempt ceiling of the bonuses,” he said.
Quimbo said that these agencies are pushing for an issuance of an administrative order fixing the tax exemption ceiling for bonuses to P55,000.
“We have had exhaustive studies and discussions on the proposed measures, and we now have solid data to finalize the substitute bill. We are, therefore, nearing the end of the legislative process on the part of the House as we project the approval on second reading of the proposed lower income taxes before March 19, 2015,” Quimbo said.
Quimbo’s House Bill 4829, a centerpiece bill of the 16th Congress, is among the 13 pending bills, which seek to restructure the income taxes imposed on individuals.
House Bill 4829 is seeking the revision of income taxes for compensation of income earners, self-employed and professionals, and corporations through simplification of tiers and rates, and indexation to inflation.
Quimbo added that his bill proposes the adjustment of the top tax base from P500,000 to P1.4 million based on the Consumer Price Index, and the indexation of other tax brackets to inflation. More significantly, workers earning P180,000 and below will now be completely tax exempt under the proposal.
Quimbo said tax brackets have remained unchanged since 1997 and have not been adjusted to inflation. And because workers’ salaries have been adjusted for inflation but tax brackets remain frozen, a vast number of workers have been pushed to higher brackets thus paying higher tax rates.
“Our current income-tax system perpetuates an archaic, unfair and inequitable policy. The data that we have gathered prove that the lowly taxpayer has been carrying the weight of income taxes for so long now. We cannot allow the suffering of our ordinary tax payers under a flawed tax system to perpetuate and last longer than necessary,” Quimbo said. The bill also seeks to simplify tax scheme for professionals and self-employed individuals by the cutting down the number of tiers from 7 to 4.
Quimbo also proposes a competitive corporate income-tax rate of 25 percent in preparation for the Asean Economic Integration.
“By undertaking these reforms, we are paving the way for inclusive growth since implementing a fair and equitable tax system is an essential component of development. Further, these reforms will also allow us to have comparable tax rates with Indonesia, Vietnam, and Malaysia – our prime competitors in trade and investments. Thus, we are vigorously pushing for the approval of the income tax reforms before session ends by mid-March,” Quimbo said.