MANILA, Philippines—After approving a higher tax exemption on bonuses, the House of Representatives will soon tackle a bill that seeks to lower personal income tax rate, which will result in a higher take-home pay.
In a press conference on Tuesday, Marikina Representative Romero “Miro” Quimbo, said the rationalization of the personal income tax would be on top of the chamber’s agenda.
“That will still be our primary bill over the next three months, more than any other bill. Our attention really is now to rationalize income taxes,” he said.
Quimbo said the House committee on ways and means, which he chairs, will focus on consolidating the nine versions of the rationalization bill and pass it at the committee level by the first quarter of 2015.
He said the committee would be working on a tight schedule as the bill should be approved on third reading by June 2015 or before the second regular session adjourns as reelectionists would be busy preparing for the 2016 elections.
“We will be able to finish the personal income tax rationalization by first quarter. But I cannot guarantee that it will be approved on second reading by March before the break,” Quimbo said,
“If we’re not able to approve it in June, the income tax overhaul may not stand a chance because of the elections,” Quimbo said.
The present tax code sets a 32 percent rate for individuals with an annual taxable income of more than P500,000.
Quimbo said his version, House Bill No. 4829, proposes a flat rate of 25 percent income tax on self-employed individuals and professionals, and a five percent minimum income tax rate on self-employed individuals and professionals.
His bill also reduces the corporate income tax (CIT) rate from 30 percent to 25 percent and increases the minimum corporate income tax (MCIT) rate from two percent to five percent.
Quimbo said the levels of taxable income brackets and the corresponding base amount of tax for compensation income earners will be adjusted based on Consumer Price Index (CPI).
Proponents of the bill stressed the need to amend the tax code and create a progressive tax system.
At least 16 percent of total individual income earners pay for 85 percent of total individual income tax collection in 2013, Quimbo said.
Meanwhile, 72 percent of all income taxes are paid by the middle class while the highest income earners shoulder a smaller portion of tax payments, he added.
Quimbo had warned of a “bracket creep” phenomenon wherein workers’ salaries increase according to inflation while tax brackets remain unadjusted since 1997, when the tax code was passed.
In a column published in the Philippine Daily Inquirer, Senator Sonny Angara wrote that “the Philippines has some of the highest taxes in Southeast Asia, not to mention one of the highest value-added tax (VAT) rates at 12 percent.”
“Income is taxed at very high percentages and at very low thresholds or amounts and brackets,” wrote Angara, who is also batting for lower tax rates in the Senate.
On Tuesday, Congress ratified the bill seeking to increase the tax exemption cap on bonuses, including 13th month pay and Christmas bonus, to P82,000, from the current P30,000. -@MJcayabyabINQ, INQUIRER.net
Read more: http://newsinfo.inquirer.net/654168/house-panel-eyes-lower-income-tax-rate#ixzz3KjU7U4mr
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