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Villar refiles bill to reduce income tax rates

By Marvin Sy (The Philippine Star) | Updated July 9, 2016 - 12:00am




“To ease the burden of our Filipino workers, and for our country to be at par with regional standards and to make the Philippine workforce more competitive with its neighbors, this bill seeks to amend the Tax Code by adjusting the individual income tax brackets and reducing the rates of individual income tax,” Villar said. MONG PINTOLO

MANILA, Philippines - After proposals to bring down the income tax rate for wage earners failed to get the backing of the Aquino administration, Sen. Cynthia Villar is hoping President Duterte will be more open to the idea for the benefit of millions of employees.

Villar has filed Senate Bill 147, which seeks to amend Section 24 of the National Internal Revenue Code of 1997 or Tax Code.

“To ease the burden of our Filipino workers, and for our country to be at par with regional standards and to make the Philippine workforce more competitive with its neighbors, this bill seeks to amend the Tax Code by adjusting the individual income tax brackets and reducing the rates of individual income tax,” Villar said.

For individuals who earn no more than P20,000 annually, Villar’s proposal is to impose an income tax rate of five percent.

Under the present system, individuals who earn no more than P10,000 a year are taxed five percent by the Bureau of Internal Revenue.

For individuals who earn over P20,000, but not over P60,000, Villar is proposing a tax of P1,000 plus 10 percent of the excess over P20,000.

If the annual compensation is over P60,000, but not over P140,000, the proposed rate is P5,000 plus 15 percent of the excess over P60,000.

For those who earn over P140,000, but not over P280,000, the proposed rate would be P17,000 plus 20 percent of the excess over P140,000.

If an individual earns over P280,000, but not over P500,000, the proposed rate would be P45,000 plus 25 percent of the excess over P280,000.

Wages over P500,000, but not over P1 million would be taxed P100,000 plus 30 percent of the excess over P500,000.

 Individuals who earn over P1 million annually would be taxed P250,000 plus 32 percent of the excess over P1 million.

Villar noted that an analysis of tax policies of the countries comprising the Association of Southeast Asian Nations (ASEAN) shows that the Philippines has one of the highest average tax rate behind only Vietnam and Thailand.

 “Those earning just a little over P500,000 pay the same income tax rate at 32 percent as those earning in the millions. The injustice in the present tax system is apparent and should be immediately addressed,” Villar said.

Villar said the country’s tax policy should follow the lead of richer neighbors in the ASEAN that allows more disposable cash or purchasing power to be left in the hands of taxpayers to enable them to have a good quality of life and provide for their families.

Meanwhile, Sen. Bam Aquino has pushed for a measure that provides small businesses with lower income tax rate, value-added tax (VAT) exemption and other privileges to further stimulate economic growth.

Under Aquino’s Senate Bill 169 or the Small Business Tax Reform Act, all small businesses will be exempt from payment of income tax for the first three years of and will be subjected to lower income tax rates thereafter.

As defined in the bill, small businesses are micro and small enterprises with annual gross revenue not exceeding P50.000.

“This bill also proposes the lowering of the income tax rate for MSEs and an exemption from VAT, among other methods of stimulating growth in MSEs as opposed to hindering it,” Aquino said.

The measure also pushes for simpler bookkeeping, a special lane and assistance desk for MSEs, exemption from tax audit, annual filing of returns, and payment in installment.

Sen. Loren Legarda also filed priority bills that she said promotes inclusive growth and social justice.

“To be able to give everyone equal and equitable opportunities for growth, we need to address not only the concerns of Filipinos in general, but even more so those of our senior citizens, war veterans, persons with disabilities (PWDs), solo parents and others who have special needs that make it more challenging for them to be part of nation building,” Lozada said.

Among the bills she filed are the proposed Amendment to the Solo Parents Welfare Act, which aims to help lessen the financial burden carried by solo parents by affording them additional benefits, such as discounts from purchases for their children’s basic needs.  — With Paolo Romero
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