DOF: 4 of 5 taxpayers to benefit from proposed reform package

Four out of five taxpayers are going to benefit from the proposed tax reform measure submitted the Department of Finance (DOF) to the Congress last week.

Once the measure is legislated into law, around 4.7 million taxpayers earning P250,000 a year or less will no longer have to pay the personal income tax starting 2018, the DOF said in a statement on Wednesday.

More than half-a-million taxpayers who earn between P250,000 and P400,000 will pay only 20 percent in personal income tax for their income above P250,000.

Citing a 2013 data from the Bureau of Internal Revenue (BIR), the Finance department said the beneficiaries of the tax plan represent four-fifths of the total tax base of individual taxpayers.
 
"The tax plan’s package one covers cuts in personal income tax (PIT) payments under a simplified, modified gross income system, plus revenue measures to offset losses from such PIT reductions," DOF said.
 
On September 26, the DOF submitted to the Congress its proposed Tax Reform for Acceleration and Inclusion Act – the first of four tax reform packages of the Duterte administration.

Tax Management Association of the Philippines President Benedict Tugonon noted that majority of taxpayers will definitely benefit from the tax reform package.

"We did some computations and really noticed the reduction of the income tax due for majority of the taxpayers. We encourage people to compute their income tax as well to compare their income tax due before and after the new tax bracket will take effect," Tugonon said.

Of the total base of individual tax payers numbering 5,612,777, BIR data showed 1,752,009 or 31.2 percent are minimum wage earners.
 
Finance Secretary Carlos Dominguez III said that reducing the personal income tax rate from 32 percent to 25 percent would be done over a two-year period to benefit most taxpayers except the “ultra-rich” or those earning P5 million or more annually.

Dominguez  noted the general rule behind the income tax reform plan is that the rich will have to pay more while poor and low-income Filipinos will pay less or none at all.

“To raise the additional P1 trillion per year, the government needs to adopt a fairer, simpler and more efficient tax system with low rates and a broad base that can promote investment, job creation and poverty reduction,” he said. — VDS, GMA News