Lower income tax to cut revenues but proponent sees rebound in 3 years

Senator Sonny Angara admitted on Friday that revenue collection may decline with his proposed lower income tax, but added that the government was bound to recover from the losses in a few years.

 

In a phone interview with News To Go, Angara said that if his proposal to reduce individual income tax rate to 25 percent, pushes through, there may be a decrease in revenue collection for the first two to three years of its implementation.

 

He added, however that collection will kick back up after the said period, which was what happened when the corporate income tax was lowered in 1997.

 

"Siguro sa unang dalawa, tatlong taon, bababa talaga ang ating koleksyon, ngunit pagkatapon no'n ay, palagay ko, sisipa naman ang koleksyon," Angara said.

"Ang kailangan nating tingin dito ay long-time reform ito, 'wag nating tingnan 'yung taun-taunan koleksyon natin, pero tingnan din natin 'yung estado ng ating lipunan," he added.

 

 

"Ang nakikita natin, nagkukumpol-kumpol sa baba na ang mga working class natin," Angara said. "Kaya nga overtaxed sila at mababa na nga ang kita nila so wala nang naiiwan doon sa pangangailangan nila sa buhay ... Hindi na nagiging dekalidad at 'yan ay may epekto sa ating lipunan."

 

Angara's Senate Bill No. 2149 aims to lower the country's individual income tax rate from the current 32 percent to 25 percent by 2017.

 

The senator said he came up with the proposal because he thought the working public was at a disadvantage with the current and seemingly outdated income tax system in place.

 

"Sa tingin natin, hindi na maka-mamamayan ang sistema nating pambuwis, dahil nagpag-iwanan na ito ng panahon ... kasi ang paggawa ng ating tax system ay wala tayong inilagay na kailangang magbago ang mga brackets to keep in touch with inflation para habulin nya yung pagtaas ng presyo," he told News To Go.

 

He added that the law in place in the Philippines is unlike those in other countries, which allows for "indexing for inflation."

 

"Kahit luma naman 'yung mga batas sa ibang bansa, meron silang provision na indexing for inflation. Ang ibig sabihin nga no'n ay every three to five years, babaguhin nila 'yung mga brackets or mga porsiyento para naisasaalang-alang 'yung pagtaas ng mga presyo."

 

He said that their proposal may also include updating the highest bracket, which will be taxed with the current 32 percent, from P500,000 to perhaps those earning from P3 million.

 

"Simula pa nu'ng panahon ni Presidente Marcos, 1977, ang top tax rate natin ay P500,000, nakakabili ka na daw ng house-and-lot, nakakabili ka na daw ng sampung kotse, so talagang malaki na 'yon nu'ng panahong 'yon. Pero sa ngayon, 'yung P500,000 ay maituturing natin -- ayon sa datos ng gobyerno -- middle-class na po 'yan," he said.

 

Under Angara's proposal, the tax rate for those earning between P20,000 to P70,000 will be lowered to 10 percent from 15 percent; the tax rate for those earning between P70,000 to P200,000  will be lowered to 15 percent from 20 percent; the tax rate for those earning between P200,000 to 500,000 will be lowered to 20 percent from 25 percent;  the tax rate for those earning between 500,000 to P1 million will be lowered to 22 percent from 30 percent; and the tax rate for those earning over P1 million will be lowered to 25 percent from the current 32 percent. 

 

Earlier, the senator said "it is the right time" to approve the proposal to boost the public's confidence in the government amid the controversies brought by the Priority Development Assistance Fund (PDAF) and the Development Acceleration Program (DAP).  — Rose-An Jessica Dioquino/NB, GMA News