Congress to fast track passage of lower income tax rates

Amid growing public clamor for Congress to pass a law reducing income tax rates, leaders of the House of Representatives and Senate on Monday have agreed to fast-track deliberations on a comprehensive tax reform bill that aims to ease the tax burden of the Filipino working class. 

 

Marikina Representative Romero “Miro” Quimbo, chairman of the House Committee on Ways and Means, said the law cutting income tax rates would be passed by 2015 after congressional leaders decided to prioritize the legislation of a comprehensive tax reform bill. 

 

“It will be,” he told GMA News Online, when asked about the possibility of a tax reform law being passed next year. 

 

The Marikina City lawmaker, who is at the helm of the Tax Reform for Inclusive Growth (TRIGR) campaign, said he was elated that leaders of both houses have recognized the urgency of legislating tax reforms. 

 

“Support for the TRIGR movement does not only emanate from the citizenry. My colleagues in the legislature have likewise expressed their support, even clamor, for tax reforms,” Quimbo said in a statement. 

 

The Philippines has the highest income tax rate among Southeast Asian countries at 32 percent.

 

At least three bills seeking to lower individual tax rates by as much as 15 percent have been filed at the House.

Aside from Quimbo, Valenzuela Representative Magtanggol Gunigundo and Pasig City Representative Roman Romulo also filed their respective versions of the measure.

The Ways and Means committee will begin deliberations on these proposals on Wednesday. Officials from the Department of Finance and Bureau of Internal Revenue are expected to attend the hearing. 

 

Corporations, individuals to be taxed equally

 

Senator Juan Edgardo “Sonny” Angara, chair of the Senate Ways and Means committee, welcomed the decision of Senate and House leaders to prioritize the tax reform bill as a “sign of progress” since they have been initially reluctant to consider proposals to lower income tax rates.

 

In an ambush interview in Makati City Monday, Angara also expressed optimism that President Benigno Aquino III will support the passage of a tax reform bill.

 

“Kung maibabalanse naman ang pangangailangan ng estado na pondohan ang mga mahahalagang imprastraktura at ang interes ng  pamilya ng bawat mamamayan, palagay ko di naman niya hahadlangan ito,” the lawmaker said.

 

Angara has filed a bill seeking to adjust individual income tax brackets starting next year. By 2017, Angara’s bill seeks to lower tax rates to 10 percent from 15 percent for those earning between P20,000 to P70,000 and to 25 percent from the current 32 percent for those earning over P1 million.

 

For his part, Quimbo has filed House Bill 4829 seeking to adjust the levels of taxable income brackets and the corresponding base amount of tax for compensation income earners based on updated Consumer Price Index (CPI).

 

Under the proposal, a flat rate of 25 percent income tax will be imposed on self-employed individuals and professionals while a five percent minimum income tax rate will be foisted on self-employed individuals and professionals.

HB 4829 likewise seeks to reduce the corporate income tax (CIT) rate from 30 percent to 25 percent and increase the minimum corporate income tax (MCIT) rate from two percent to five percent.

 

Imposing a 25 percent income tax rate for self-employed individuals and professionals -- in essence according them full treatment as corporations—will be advantageous to both parties, Quimbo said in the bill’s explanatory note. 

 

"Since both are engaged in business for profit and allowed the same business deductions, they must be equally treated under our tax regime," Quimbo said.

 

Long overdue reforms

 

Citing recent empirical data, Quimbo said only 15 percent of the total collection of individual income taxes was paid by self-employed individuals and professionals, while the bigger chunk of 85 percent comes from compensation income earners,

 

Amending the present tax system will  make compliance by self-employed and businessmen easier, the lawmaker noted.

 

Quimbo said putting a “fair and equitable tax system” in place was necessary if the government sought to promote inclusive growth. He described the current tax system as “putt[ing] too much burden” on working class taxpayers and little on well-off individuals.

 

“A fair and equitable tax system is a cornerstone of inclusive growth. If we really want to achieve inclusive growth, we cannot disregard the plight of our taxpayers and continue bleeding them dry through our flawed tax system,” he said.

 

Last week, Socioeconomic Planning Sec. Arsenio Balisacan said at the national conference of the Koalisyon ng Mamamayan Para sa Reporma (KAMPRe) that tax reforms were “long overdue.”

 

“Niawanan na kasi ng inflation yung mga [tax] brackets natin, kaya tuloy yung mga low-income [earners], nagbabayad na ng dapat ibinabayad ng mga mayayaman,” he said. —NB, GMA News