Lower taxes on wage earners proposed

LEGAZPI CITY, Albay, Philippines—A top Senate official and one of President Macapagal-Arroyo’s close economic advisers on Friday urged government to lower income taxes for ordinary wage earners as this could help reduce poverty and increase investments.

Senate President Juan Ponce Enrile and Albay Governor Joey Salceda said lowering income taxes for wage earners could boost businesses in the country.

“There will be economic growth if you lower the cost of doing business, especially power and water, and the impact of taxation—you attract capital to your country,” Enrile said in a press conference held here Friday.

He said employees could not cope with the standard of living in the country because of high income tax.

According to Enrile, high income tax also results in a high number of tax evasion cases.

“The government must definitely reduce the burden of the employees by reducing income tax if we really want to alleviate poverty,” Enrile said.

“This is my recommendation to President Arroyo and even to the next administration after the elections in 2010,” he said.

Reducing income taxes also result in savings, he explained.

“Savings in taxes by somebody is income to another,” Enrile said.

“When we reduce income tax, people will actively spend their money and when they do, there is an incidence of taxation again and again so you recover it,” he said.

Salceda supported Enrile’s views.

“I agree that we should shift income taxes, firstly because of the inability of the Bureau of Internal Revenue (BIR) to collect taxes from the rich since 1946,” he said.

Salceda said the BIR could only collect P16 billion from the self-employed but ordinary wage earners pay P114 billion “simply because withholding tax is almost 90 percent of the total income tax.” –Rey M. Nasol, Inquirer Southern Luzon