By Jovee Marie N. Dela Cruz, Pia Quinto and Reicelene Joy Ignacio
The technical working group (TWG) of the House Committee on Ways and Means has approved the consolidated bill lowering individual taxes, the House Committee on Ways and Means chairman said on Sunday.
In a radio interview, Liberal Party Rep. Romero Quimbo of Marikina, the panel chair, said that the lower chamber will pass the tax measure this December and will pass it into law this 16th Congress, which is set to end by June next year.
“The TWG has finished its deliberations. Now we have consolidated the bill to be deliberated at the committee,” Quimbo said.
Under the TWG approved bill, Quimbo said 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.
Currently, those with annual earnings of P500,000 and above pay 32-percent income tax.
According to Quimbo, one of the authors of the bill, the tax measure will help drive household consumption spending and sustain the country’s economic growth.
The lawmaker said that 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 (VAT) at 12 percent.
He added that the country’s current individual income tax bracket has remained unchanged since 1997 until today even when the consumer price index has already almost doubled.
Earlier, Quimbo and Senate Committee on Ways and Means Chairman Sonny Angara said that lowering personal income tax rates is the “best goodbye gift” that President Aquino can give to Filipinos.
“I’ve been campaigning for the lowering of taxes not because it’s popular but simply because it is just and long overdue. It is the best example of inclusive growth. It will be remembered as the President’s most lasting legacy,” Quimbo said.
On his part, Angara, author of the tax measure in the Senate, said that “of the thousands of words in his SONA [State of the Nation Address today], one of the most awaited and the one which will be most applauded is the President saying that he will back bills that will lower individual income taxes.”
“We need to think ahead and be competitive in the region but more importantly, we must give the Filipino people a break. Currently, a policeman and a teacher whose net taxable income is P150,000 are taxed at the third highest rate,” the senator said.
The senator also calmed concerns by revenue officers that altering tax rates will drain the national coffers.
“Any revenue loss is recoverable. If withholding tax is converted into disposable income, then it can be recouped through the VAT on goods. If part of the salary intended to be remitted to the BIR will now be spent for goods, then it can still be recaptured through the tax on the goods bought,” Angara said.
“It will also be good for the economy. It is always better to plow money back in circulation, where it can stimulate the production and consumption of goods. Sometimes, instead of government doing the spending for the people, let the people do the spending themselves,” he said.
Meanwhile, Quimbo admitted that the government stands to lose P92 billion annually should Congress give in to the measure on income-tax reforms.
To recover this revenue loss, Quimbo said that Congress would also approve revenue-generating measures such as bills raising excise tax on fuel, the fiscal incentives rationalization bill, the proposed Tax Incentives Management Act (TIMTA), Customs Modernization and Tariff Act (CMTA), Rationalization of the Mining Fiscal Regime, and the bill imposing specific tax on sodas and other sweetened beverages.