Senator Juan Edgardo Angara has expressed confidence that his proposal to lower income tax rates across-the-board will be passed into law under the administration of President-elect Rodrigo Duterte, who has included tax reforms in his 10-point priority socioeconomic agenda.
“We’re happy that the sentiments of our workers, who feel that they are being excessively taxed, are now being heard,” said Angara, chairman of the Senate ways and means committee.
“We’ve been pushing for income tax reform since we were elected in 2013 when we saw how outdated, unfair and oppressive our current system of taxation is,” he added.
Duterte’s incoming Finance secretary, Carlos Dominguez, earlier assured business leaders that they will review the tax system, “initially to update the income tax brackets and eventually to lowering corporate and individual tax rates.”
Angara’s initial proposal, Senate Bill No. 2149 filed in February 2014, aims to lower income tax rates across-the-board, reducing the highest tax rate from 32 to 25 percent and compressing the tax brackets from seven to five.
Subsequently, in November last year, the senator filed SB No. 3003 that seeks to adjust the levels of taxable income to take into account inflation.
Dominguez said the incoming administration will submit a tax reform package to Congress by September to “institute progressive tax reform and more effective tax collection, indexing taxes to inflation.”
“Corporate taxes will also be adjusted to be competitive with the rest of the region to make our economy more competitive for investments,” Dominguez added.
“I’m looking forward to the tax reform package that will be submitted to us. We’ll make sure that the Congress passes a version that will ease the tax burden of our workers and at the same time, would not pose risk to the country’s fiscal health but would help improve revenue collection, attract foreign direct investment and boost job generation in the country,” Angara said.
A recent study by the University of the Philippines School of Economics showed that while a decrease in corporate income tax rate will initially lead to lower corporate income tax collection, the offset will come in the form of greater net collections given the projected increase in investments when corporate income tax rates are reduced.
Dominguez also said that they would review the long list of VAT-exemptions to compensate for the expected revenue loss from lower taxes.