₱350K tax exemption to boost economy despite ₱70B revenue loss — Quimbo

The government could lose around ₱70 billion in revenues annually if the proposed ₱350,000 income tax exemption threshold is implemented, but the measure could generate greater economic benefits in the long run, House Ways and Means Committee chair Miro Quimbo said Wednesday.

In an interview on Balitanghali, Quimbo, who also represents Marikina, said the foregone revenues could flow back into the economy through increased consumer spending.

“First is nagkakaroon ng economic activity. So kahit mawalan tayo ng ₱70 billion, 'yang perang 'yan na ibinabalik din natin sa mga middle class workers ay gagamitin din nila para panggastos,” he said.

(First, it will generate economic activity. So even if we lose ₱70 billion, that money will go back to middle-class workers, who will use it for spending.)

Quimbo made the statement after the House panel approved a measure raising the annual income exempt from tax to ₱350,000 from the current ₱250,000.

He said the government could still collect revenues from the additional consumer spending through taxes such as the value-added tax and excise taxes on products covered by sin taxes.

The House hopes to pass the measure by the end of 2026 so it could take effect in January 2027.

Quimbo said raising the tax-exempt income threshold would also account for inflation, noting that the current ₱250,000 threshold was set in 2018.

“Ano ba ang halaga ng ₱250,000 nung 2018, ano na siya today? So today ito ay halos ₱350,000. So parang nire-restore natin 'yung kanilang tax exemption based on their original salary noong 2018,” Quimbo said.

(What was the value of ₱250,000 in 2018, and what is its value today? Today, it is almost ₱350,000. So we are essentially restoring their tax exemption based on the value of their salary in 2018.)

Several measures seeking to raise the income tax exemption threshold have been filed after President Ferdinand Marcos Jr. urged Congress during his State of the Nation Address to enact tax relief measures.

Some lawmakers have proposed raising the threshold further to ₱500,000.

Asked about a possible ₱500,000 exemption threshold, Quimbo said fewer taxpayers fall within that income bracket but noted that the government collects a significant amount of revenue from them.

Quimbo said lawmakers would study the ₱500,000 proposal. He added that the legislation would include a provision requiring the income tax exemption threshold to be reviewed every five years. — MCG, GMA News