MANILA, Philippines – Presidential Communications Secretary Herminio "Sonny" Coloma said in a radio interview Saturday, September 5, that the government is for the "status quo" on the issue of new, higher taxes or income tax cuts.
“According to (the Bureau of Internal Revenue) Commissioner (Kim) Henares, the government is not proposing higher VAT (value added tax) rates. We're for status quo: no change in tax rates and no new or higher taxes, and also no income tax cuts," Coloma said.
"The government will just focus on improving (tax) collection,” he added.
The response came after it was reported on September 3 that the Palace rejected a House bill that seeks to lower income tax rates in the country.
Marikina Representative and committee chairman Romero Federico “Miro” Quimbo earlier said
the new bill would have 4 brackets, which include:
- Workers earning less than P180,000 ($3,834.80) a year would be exempted from paying income taxes
- Workers earning P180,000 ($3,834.80) to P500,000 ($10,652.22) would pay a tax rate of 9%
- Those earning between P500,001 ($10,652.24) to P10 million ($213,044.30) a year would have a tax rate of 17%
- Those earning more than P10 million ($213,044.30) would pay a 30% income tax
Quimbo said corporate taxes would be reduced to 25%.
It is seen that the goverment would lose at least P30 billion (P639.13 million) during the first year of its implementation. But the upside is, there would be an increase in tax collection as it would be easier for tax payers to comply with the proposed simpler tax brackets.
But Coloma said it is important to look at the big picture, as "taxes are the lifeblood of the economy."
He added the Palace is favoring the Department of Finance's (DOF) "holistic standpoint" to make the "tax system equitable, progressive, and competitive.”
"Let's just not look at the income tax (cuts). While the (proposed measure) is popular, let's consider the big picture. All these have to be carefully studied," Coloma said.
DOF submitted to Congress in August the government’s tax reform bill, which includes an all-in income tax exemption to all wage earners with an annual income of less than P1 million ($21,304.43).
Along with the proposal is increasing VAT from 12% to 14% and expanding the VAT base by removing all exemptions, except in agriculture, health, banks, education, as well as removing zero-rating, except direct exports. – Rappler.com
$1 = P46.99
Tax cut image from Shutterstock