Lower estate tax to ease burden of families in grief, says lawmaker

Sen. Juan Edgardo Angara on Tuesday said adjusting the estate tax rates will help ease the burden of grieving families as well as increase tax collection and compliance.

“Like the income tax rates, estate tax rates have not been updated since 1997. This tax burden has led families to delay settling the estate, resulting in huge penalties and surcharges while use of assets are not maximized," Angara, chairman of the Senate ways and means committee, said during a hearing in Pasay City.

“Kaya rin po siguro maraming lupain at iba’t-ibang estate ang naka-tengga lamang ngayon, imbis na ngayo’y pinagkakakitaan at nagiging economically productive,” the senator added.

The average collection of estate taxes is P1 billion a year, compared with a potential of P10 to P50 billion, he said.

From 2000 to 2013, only 30,000 filed estate tax returns out of an annual average of deaths of 445,000, Angara said, citing data from the Philippine Statistics Authority.

Estate tax is a tax on the right of the deceased person to transmit his or her estate to lawful heirs and beneficiaries at the time of death and on certain transfers, according to the Bureau of Internal Revenue (BIR).

Seven related bills were filed at the Senate. Angara’s SB 980 seeks to index estate tax brackets to inflation and adjust the minimum net estate subject to estate tax from P200,000 to P460,000 and adjusted once in three years after that..

The proposed measure also adjusts the allowable deductions to “more realistic and equitable” levels and covers funeral expenses from P200,000 to P500,000, the value of the family home from P1 million to P2 million, the standard deduction from P1 million to P2 million, medical expenses from P500,000 to P1 million and the allowable bank withdrawal from P20,000 to P200,000.

“Dagdag po sa pagluluksa ng pamilya, mayroon mga usaping praktikal na kailangan din intindihin. Halimbawa, ang pambayad sa burol at libing, o ang bayarin sa ospital, kung sakaling sakit ang ikinamatayan," Angara said.

"Gusto po nating pagaanin ang pasanin na ito,” he added.

The hearing by the Senate wand and mean committee comes after the House of Representatives approved on Monday two bills granting amnesty on estate taxes (House Bill 4814)  and simplifying the estate tax rate at 6 percent (House Bill 4815).

HB 4814 allows a person to be exempted from paying the estate taxes on the property of a deceased loved one from prior years to taxable year 2016.

At present, the National Internal Revenue Code exempts from tax a net estate of up to P200,000 and imposes four tiers of taxes from 5 percent to 20 percent based on the value of assets.

Heirs to properties worth P10 million and above have to pay P1.2 million plus the 20 percent of the excess above P10 million. — VDS, GMA News