A TAX measure aimed at raising the taxable-income threshold will reduce revenue collection by P30 billion annually but is still necessary to ensure a fairer tax system for middle-income workers, Senate Ways and Means Committee Chairman Juan Edgardo M. Angara said.
Speaking before the Employers Confederation of the Philippines (Ecop) 36th National Conference for Employers, the senator aired anew his push for the adjustment of individual income-tax brackets.
Senate Bill (SB) 2149 initially proposed that tax rates be adjusted from the maximum rate of 32 percent to 25 percent.
However, Angara said he already agreed not to touch the rates but just compress the income-tax brackets by raising the maximum taxable-income ceiling from the current P500,000 to P5,000,000.
“If you adjust P500,000 for inflation from 1997 when it was set, that P500,000 is already P5 million now. I’m willing to keep the percentages at their current level, concession ko na nga ’yon, basta make it equitable,” Angara told the Ecop members on Thursday.
Currently, the maximum tax rate of 32 percent is applied to all individuals earning above P500,000 a year. With this outdated tax system, those who earn roughly P42,000 monthly are paying the same rate as the country’s millionaires.
Angara said the potential take-home pay, for instance, of a business-process outsourcing worker of P20,000 to P30,000, or around $5,000, is taxed annually at a rate of 25 percent in the Philippines. By comparison, in Malaysia, the same amount is taxed at a 2-percent rate; Thailand, 10 percent; Indonesia, 15 percent; and Singapore, tax exempt.
In the country today, the minimum tax rate of 5 percent is applied to those earning P10,000 and below per moth. A 10-percent rate is applied to income higher than P10,000 but less than P30,000.
Angara’s proposal of adjusting the income-tax brackets would mean that individuals who may have been paying a larger tax rate of 15 percent may be classified into a lower tax class, as a result of the ceiling adjustment.
The senator is keeping mum on the actual tax structure, but said the move will likely result in P30-billion revenue losses annually, as middle-income workers may qualify for lower tax rates.
At present, the Senate is done with the committee report on the SB 2149, but has not reported it out yet on Senate floor. The House of Representatives must pass its own version of the bill first before the Senate can take further action.
5 comments
DAPAT LANG ! KAMING MGA MANGGAGAWA ANG NAGPAPATAKBO SA EKONOMIYA…. SNA NAMAN AY WAG KAMING PABAYAN NG GOBYERNO.
tAMA ka kaya sana maipatupad ito agad. Salamat at may nagmalasakit para sa mga manggagawa.
Senator Angara never stops finding ways to make the the lives of the working public easier. I just hope that other lawmakers support this move.
Here are some “luxuries” the poor might be able to afford if the tax system wasn’t fundamentally unfair: Food, Medicine,and Clothing.
By burdening the poor and the middle class with the highest tax rates, we are effectively guaranteeing that the economic inequality chasm will continue to grow.