The Tax Management Association of the Philippines (TMAP) and 21 foreign business groups, professional organizations, and trade and labor groups on Wednesday asked the leadership of the House of Representatives to pass the measure adjusting the levels of taxable income to inflation as compromise to the proposal lowering income- and corporate-tax rates strongly opposed by the Palace.
In a news conference at the House of Representatives, TMAP President Terence Conrad Bello said the proposal should be passed to increase the take-home pay of Filipino workers.
“While compromise proposal involving only the updating of the tax brackets is not what TMAP and its coalition partners had in mind, TMAP believes that the compromise proposal will immediately alleviate somehow the plight of salaried individuals who are ‘overtaxed’ under the current system,” Bello said.
He added that the TMAP and the 21 foreign business groups, professional organizations, and trade and labor groups have submitted a proposal adjusting the levels of taxable income to inflation to Speaker Feliciano Belmonte Jr.
Under their proposal, which is similar to the proposal raised by House Committee on Ways and Means Chairman and Liberal Party Rep. Romero Quimbo of Marikina City, the seven new tax brackets are:
Those earning not over P22,000 will pay a fixed tax rate of 5 percent;
Those earning over P22,000 but not over P66,000 would pay a fixed tax of P1,100 with an additional 10 percent of the excess over P22,000;
Those earning over P66,000 but not over P153,000 would pay a fixed tax of P5,500 with an additional 15 percent of the excess over P66,000;
Those earning over P153,000 but not over P307,000 would pay an excess tax of P18,550 with an additional 20 percent of the excess over P153,000;
Those earning over P307,000 but not over P547,000 would pay a fixed tax of P49,350 with an additional 25 percent of the excess over P307,000;
Those earning over P547,000 but not over P1.095 million would pay a fixed tax of P109,350 with an additional 30 percent of the excess over P547,000; and
Those earning over P1.095 million would pay a fixed tax of P273,750 with an additional 32 percent of the excess over that amount.
“We voiced our support for various income-tax reform measures then pending in Congress to restore fairness in the Philippine tax system and make our country competitive with our Asean neighbors,” Bello said.
Included to the foreign chambers who have expressed support to the proposal are the European Chamber of Commerce of the Philippines, Japanese Chamber of Commerce and Industry, Canadian Chamber of Commerce of the Philippines, Korean Chamber of Commerce of the Philippines and the Australia-New Zealand Chamber of Commerce of the Philippines.
Moreover, Bello also expressed hope that this proposal will be passed before the 16th Congress ends next year.
“Despite popular support from taxpayers and from the Senate and the House of Representatives Ways and Means Committee leadership, it seemed that the chances of passing the income-tax reform measure then pending were slim to none, without the support from the President,” he said.
In September Malacañang, taking the cue from the Department of Finance, already rejected the passage in Congress of a long-pending bill lowering individual and corporate income-tax rates, saying the government “cannot put our fiscal sustainability and credit rating at risk by doing piecemeal revenue-reducing legislation.”
Belmonte has said that he and Senate President Franklin Drilon are set to meet soon with President Aquino to convince him at least on the proposal adjusting the levels of taxable income to inflation.
Quimbo, for his part, admitted that only the proposal adjusting the levels of taxable income to inflation is viable considering the remaining session days of Congress and the position of the Palace against lowering income-tax rates.
The finance department, meanwhile, said adjusting the levels of taxable income to inflation may cause the government to lose revenues totaling as much as 1.5 percent of the country’s GDP, or P30 billion.
Source: Business Mirror