House Committee on Ways and Means drafting bill on lower income tax rates
March 1, 2014 at 16:59
House Committee on Ways and Means drafting bill on lower income tax rates
26 March 2014 07:56:17 AM
Writer: Rowena B. Bundang, Media Relations Service-PRIB
The House Committee on Ways and Means is currently drafting a bill on the reduction of income taxes for both individuals and corporations.
Rep. Romero “Miro” Quimbo (2nd District, Marikina City), committee chairman, said the committee has been working with the National Tax Research Center (NTRC) in crafting the bill, and its filing will be done in coordination with Sen. Juan Edgardo Angara, chairman of the Senate Committee on Ways and Means.
“We’ve been working on this the last three weeks with the NTRC. This bill will be the mother bill to be taken up. It is being filed in coordination with the chair of the Senate’s committee on ways and means, Sen. Sonny Angara,” said Quimbo.
He said the Technical Working Group (TWG) of the House committee on ways and means is still finalizing the appropriate rates for the income tax reduction.
Quimbo said the objective in working for the reduction of income tax rates is in line with the inclusive growth agenda of President Aquino.
“The objective is to carry out the President’s vision to have a growth that’s inclusive,” said Quimbo.
In his fourth State of the Nation Address (SONA) last year, President Aquino highlighted the government’s commitment to attain inclusive growth for the Filipinos by creating more economic opportunities for them. “Our strategy is to maximize opportunities for all, especially for those most in need. What we call inclusive growth is the principle that drives every initiative, every action and every decision of your government,” the President said.
Two bills have so far been filed at the House seeking to cut income tax rates. Last March 10, Rep. Magtanggol Gunigundo (2nd District, Valenzuela City) filed House Bill 4099 seeking to lower individual and corporate income tax rates to 15 percent from the current 32 percent and 30 percent, respectively.
Meanwhile, Rep. Salvacion Ponce Enrile (1st District, Cagayan) last year filed House Bill 210 seeking to reduce income tax rates of individuals with taxable income amounting to P10,000 to over P12 million.
Ponce Enrile said her bill intends to jumpstart the economy by empowering the consumer with more purchasing power which can be done by increasing their take home pay through lower tax rates and hence, lower deductions from their income.
Meanwhile at the Senate, Angara filed last February 27 Senate Bill No. 2149 seeking to adjust individual income tax brackets and lower the rates on individual income tax starting January 2015. It seeks to lower tax rates to 10 percent from 15 percent for those earning between P20,000 to P70,000 and to 25 percent from the current 32 percent for those earning over P1 million.
Gunigundo, a Deputy Majority Leader, said his proposal, if enacted into law, would definitely reduce the number of Filipinos who do not pay taxes. “Lower taxes mean higher level of compliance. The advantages of having 15 percent income tax rates are enormous,” he said.
For one, Gunigundo said lower income rates will stimulate the economy by providing individual taxpayers more after tax income or disposable income which they can either save or spend in the engagement of services or purchase of goods that they are subject to Value-Added Tax (VAT).
Secondly, he said that with the expected increase in sales, an intended consequence would be the creation of more jobs by corporations to meet the increase in demand due to the enhanced purchasing power of consumers.
Thirdly, he said around 40 percent of Philippine Gross Domestic Product (GDP) come from the informal economy, which do not pay taxes.
Lastly, he said the bill intends to plug revenue loopholes that have been exploited by taxpayers in consonance with unscrupulous BIR officials.
With the impending integration of 2015 ASEAN, Gunigundo said the tax rates of the Philippines must be competitive enough to attract more foreign direct investments that will generate jobs to wipe out unemployment in the country.
Gunigundo’s House Bill 4099 seeks the amendment of Section 24A (2) of the National Internal Revenue Code (NIRC), as amended. It provides that for Rates of Tax on Taxable Income of Individuals, the tax shall be computed in accordance with and at the rates established in the following schedule:
| Net Taxable Income | Tax Due |
|---|---|
| Not over P30,000 | Exempt |
| P30,000 and above but not over P130,000 | P1,500 + 5% of the excess over P30,000 |
| P130,000 and above but not over P280,000 | P6,500 + 10% of the excess over P130,000 |
| P280,000 and above but not over P430,000 | P21,500 + 15% of the excess over P280,000 |
| P430,000 and above but not over P580,000 | P44,000 + 20% of the excess over P430,000 |
| P580,000 and above but not over P730,000 | P74,000 + 25% of the excess over P580,000 |
| Over P730,000 | P115,500 + 30% of the excess over P730,000 |
SOURCE: Media Relations Service, Public Relations and Information Bureau
