By Zinnia B. Dela Peña (The Philippine
Star) | Updated August 14, 2014 - 12:00am
MANILA, Philippines - The Tax
Management Association of the Philippines (TMAP) is backing proposals seeking
the reduction of income tax rates as well as the adjustment of tax brackets to
reflect the rising costs of goods.
In a position paper submitted to the
Ways and Means Committee of both Houses of Congress, the TMAP proposed the
lowering of the top individual income tax rate to 20 to 30 percent from the
current 32 percent to increase disposable income, improve the living standards
of Filipinos and fuel the economy.
“This is to properly consider the
change in the consumer price index through the years and to align our tax rates
with those of our Asean neighbors,” said TMAP president Rina R. Manuel.
According to the TMAP, the individual
income tax rate should at least be the same as that for corporations, which is
30 percent or even lower in order to make the Philippine workforce more
competitive with it’s Asean neighbors.
The 32-percent tax on taxable income
of P500,000 is the third highest in the Asean region after Vietnam and Thailand
at 35 percent. Others only tax from 10
percent (Thailand) to 25 percent (Myanmar).
TMAP, however, pointed out that the
35-percent rate is imposed on a top tax base equivalent to P5.4 million for
Thailand and P2 million for Vietnam – significantly higher than the
Philippines’ P500,000.
The group also proposed the exemption
of “marginal income earners” from paying taxes, noting that even a P10,000
annual taxable income is taxed at five percent.
TMAP also suggested the simplification
of income taxation of individuals to enhance compliance and help widen the tax
base. “This simplified structure for self-employed individuals/professionals,
however, will require further study and consultation with the affected sectors.
It proposed that the tax base of
self-employed individuals for the availment of the 40-percent optional standard
deduction (OSD) be based on gross income instead of “gross sales/receipts”.
An OSD is an allowable deduction from
professional/business income of the persons who are entitled use this kind of
deduction in lieu of the itemized deduction, in the maximum amount of, in the
case of individual taxpayer, 40 percent
of gross sales or gross receipts and in the case of corporation and
partnership, 40 percent of gross income
during the taxable year.
As far as the Bureau of Internal
Revenue is concerned, any move to lower income tax rates should be matched with
a corresponding reduction in the revenue targets set by the government for the
BIR.
“Any tax eroding measure should be
accompanied by a reduction of the revenue goal,” BIR commissioner Kim Henares
said when asked to comment on renewed calls for the government to lower income
tax rates.
____________________________________________________________
