The Senate on Wednesday increased the personal income tax exemption to P250,000, essentially retaining the original proposal of the Department of Finance (DOF) and the House of Representatives under the first package of the tax reform bill.
The Senate ways and means committee initially reduced the personal income tax exemption, with only the first P150,000 annual income exempted from tax.
It was Senator Ralph Recto who proposed that the exemption be increased to P250,000.
“Senator Recto proposed in the first year, [it will be implemented]. We accepted his amendment, so in full na yun…You will pay less taxes, you have a bigger exemption,” Senator Sonny Angara, chairman of the Senate ways and means committee, told reporters in an interview.
“It’s available to anybody who earns more than P250,000, unlike before na minimum wage earner exempt pero kumita man lang siya ng P10,000 over the minimum wage, yung buong halaga nagiging taxable. Ito, P250,000 mo hindi pwede galawin ng gobyerno,kahit saan ka, kahit anong income mo,” he explained.
The Senate meanwhile has so far retained the P82,000 tax exemptoion for 13th month pay and other bonuses, and the maximum P100,000 additional exemption for up to four dependents. Some 14 senators have submitted their proposed individual amendments to Angara’s committee.
The Senate version also implements the following tax schedule effective January 1, 2018 as follows:
- Over 250,000 but not over P400,000 – 20 percent of the excess over P250,000
- Over P400,000 but not over P800,000 – P30,000 plus 25 percent of the excess over P400,000
- Over 800,000 but not over P2 million – P130,000 plus 30 percent of the excess over P800,000
- Over P2 million but not over P8 million – P490,000 plus 32 percent of the excess over P2 million
- Over P8 million – P2.41 million plus 35 percent of the excess over P8 million
Such a tax scheme, however, will result in a P1-billion revenue loss, Angara said.
“We’re trying to balance a lot of things. The reason why we’re setting it at P8 million, that’s what Thailand is doing… We don’t want to set it too low and discourage high income but talented individuals ” Angara explained to Recto.
Meanwhile, Angara said the Senate version of the tax reform proposal has exceeded the revenue goal of the DOF. The amended Senate version, he said, would yield P159.5 billion in revenue—a hundred billion more than the previous revenue estimate of P59.9 billion.
The boost in the revenue, according to Angara, was significantly sourced from the amendments to the provisions on the expansion of the value-added tax (VAT) base. From the repeal of certain VAT special laws alone, he said the estimated revenue gain is raised from P14 billion to P45.5 billion.
Another major source of revenue is the doubling of the prevailing documentary stamp tax rates which will approximately yield P40 billion.
Documentary stamp tax is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, right or property incident thereto.
Source: GMA Network