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House bill seeks income tax exemption for earners of P250k a year


Employees earning P250,000 a year will be exempted from paying income tax even as existing value added tax exemptions for senior citizens and persons with disabilities will remain.

These were among the proposals laid down in a House bill filed by Quirino Rep. Dakila Carlo Cua, the chair of the House Committee on Ways and Means, as the  House looks into reform measures seen to ease the tax burden on the middle class.

The measure was backed by the Department of Finance.

"The simplified tax system will increase the take-home pay of most individuals thereby putting more money in people's pockets. This will make the system fairer and more equitable," said Finance Undersecretary Karl Chua during a hearing on Wednesday.

Through House Bill 4774, income tax brackets will be simplified by decreasing them into six brackets, with income earners receiving P250,000 or below every year being tax exempt.

The government said 83 percent of tax payers have annual salaries of P250,000 or below.

For those earning over 250,000 but not higher than P400,000 or Bracket 2, a 20 percent tax will be imposed on the excess over P250,000 starting on the second half of 2017 to 2019.

By 2020, the tax imposed on Bracket 2 income earners will be further lowered to 15 percent.

For Bracket 3, or those earning over P400,000 but not higher than P800,000, a tax of P30,000 plus 25 percent of the excess over P400,000 will be imposed until 2019.

Starting 2020, a tax of P22,500 plus 20 percent of the excess over P400,000 will be imposed.

For Bracket 4, or those earning over P800,000 but not higher than P2 million, a tax of P130,000 plus 30 percent of the excess over P800,000 will be imposed until 2019.

Starting 2020, a tax of P102,500 plus 25 percent of the excess over P800,000 will be imposed.

For Bracket 5, or those earning over P2 million but not higher than P5 million, a tax of P490,000 plus 32 percent of the excess over P2 million will be imposed until 2019.

Starting 2020, a tax of P402,500 plus 30 percent of the excess over P2 million will be imposed.

For Bracket 6, or those earning over P5 million, a tax of P1,450,000 plus 35 percent of the excess over P5 million will be imposed until 2019.

Starting 2020, a tax of P1,302,500 plus 35 percent of the excess over P5 million will be imposed.

The measure also proposes to retain the exemption of the first P82,000 of the 13th month pay.

VAT exemptions

The DOF originally proposed to remove all exceptions found in special laws, including those for senior citizens and PWDs.

Cua, however, insisted on retaining these particular exceptions in his version of the tax reform bill.

In Cua's bill, tax exemptions found in special laws will be removed, except senior citizens and PWDs.

Exemptions will also be removed for cooperatives, low cost and socialized housing, lease of residential units, power transmission, domestic shipping importation, and boy scouts and girl scouts.

The measure also seeks to reduce and restructure to single tax rate of 6 percent on net donations for gifts worth more than P100,000 annually, regardless of the relationship between the donor and donee.

Excise tax on fuel, vehicles

The bill also proposes to impose an excise tax on petroleum in a staggered increasing basis until 2019.

For the second half of 2017, a 7-percent and 3-percent tax rate would be imposed on gasoline and diesel, respectively.

In 2018, the tax rate would increase to 9 and 5 percent respectively. By 2019, the tax rate will become 10 and 6 percent, respectively.

Meanwhile, the measure proposes an increase in the excise tax imposed on vehicles. For vehicles worth P600,000 or below, a 4-percent excise tax is being proposed, up from the current two percent.

For vehicles worth over P600,000 but not more than P1.1 million, an excise tax of P24,000 plus 40 percent in excess of P600,000 is being proposed.

For vehicles worth over P1.1 million but not more than P2.1 million, an excise tax of P224,000 plus 100 percent in excess of P1.1 million is being proposed.

For vehicles worth over P2.1 million, an excise tax of P1,224,000 plus 200 percent in excess of P2.1 million is being proposed. —NB, GMA News

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