I DON’T know Senator Sonny Angara; I never
voted for him. Neither am I from Aurora. But I had met him,
professionally, a couple of years back when he was still a congressman.
It was a quick meeting; not the type that anybody will remember. Back
then, and even after he got elected to the Senate, he never struck me as
someone worth watching. Not until last week, that is.
Now I deem him somewhat deserving of our
“middle class” vote, in what my friend and fellow columnist JB Baylon
refers to as a doughnut society (where there is no middle). Rarely do
Filipino politicians -- and Sonny Angara is a politician above all else
-- court the middle class. After all, there are just too few of us; or
not enough of us to actually matter in an election.
The middle class, in my opinion, has been diminishing over time,
although statistics may indicate otherwise. Its ranks are being raided
by the lower class, as rising prices and living costs -- along with
stagnant if not declining income -- adversely affect their worth. Very
few, usually entrepreneurs, survive these “raids” and successfully go up
to the next rung.
And thus some kudos to Sonny Angara, for pointing out that the country’s
present tax system is already outdated. He also describes it as
inequitable, for making middle-income earners pay the same tax rate as
billionaires.
Finally, a Filipino politician -- a wealthy and privileged man -- who seems to understand how it feels to be middle class.
“Updating our tax system is an issue of equity. It’s not an issue
anymore of macroeconomics. That’s all meaningless if the average person
has nothing left for his family,” Mr. Angara, who chairs the Senate ways
and means committee, was quoted as saying during a Senate hearing on
bills to slash individual income tax rates. “In a highly unequal system
like ours, talagang kawawa yung nasa gitna (those in the middle are hit hardest).”
These comments make Mr. Angara a relatively brave soul; a politician who
speaks the truth. From where I sit, I do not see a rich country
pretending to be poor, like how some opt to describe us here in the
Southeast. Instead, I see a poor country pretending to be rich to the
outside world. I see a country of poor masses and impoverished
millionaires; its people victimized by its own government through
incompetence, indifference and corruption.
And the present tax system, as the government implements it, is among
the culprits. It creates a situation of inequality that the government
itself perpetrates. As an example, why is the system prejudiced against
those who have more than four children or dependents? Why can’t
taxpayers claim tax deductions beyond the fourth child? Why can’t people
claim maternity benefits from the Social Security System beyond the
fourth pregnancy?
For Mr. Angara, the issue is the tax rate, noting that the current top
tax bracket of P500,000 and above annual income has remained unchanged
since the Marcos years. “Tax brackets should be adjusted to make (these)
more sensitive to current salaries of Filipinos. Because at present, a
person who makes P50,000 a month -- who is considered middle class -- is
already in the top tax bracket and is also paying the same tax rate as
the billionaires in our country,” Mr. Angara was quoted as saying.
A person who makes P50,000 a month or P650,000 a year (including 13th
month pay) currently pays an annual income tax of roughly P195,000 and
nets an annual income of P455,000. And this results in a monthly
household budget of about P38,000. For a family of six, that monthly
budget is barely enough to keep them out of the slums.
It translates to a daily budget of about P1,200, or only P200 per day
per head -- to cover house rent or amortization, utilities, food and
clothing, transportation, education, health services, and, of course,
mandatory deductions like social security and PhilHealth, plus other
government fees and charges other than income tax.
On the other hand, a man who makes P1 million monthly or P12 million
annually -- even with a 30-32% income tax rate -- still gets to take
home about P700,000 a month to his family of six. There is major
disparity in income and purchasing ability, yet they pay the same income
tax rate?
And that is why Mr. Angara, through his Senate Bill 2149, proposes to
peg at P1 million and above -- from the present P500,000 and above --
the country’s top income tax bracket, and to reduce the maximum tax rate
from the current 32% to 25% by 2017.
I feel the top income tax bracket should be nearer the P3 million level
(or P250,000 monthly), which is more in tune with what we can
realistically define as being rich or wealthy or having more than
enough. Taking the case of a family of six, an annual family income of
P1 million minus P250,000 in tax (at 25%) results in a daily household
budget of only P340 per head per day -- which is below the present
minimum daily wage in Metro Manila.
Mr. Angara’s plan is already a major step in the right direction,
particularly for middle income earners like me. But unless he raises the
top income bracket to at least P3 million, cutting the tax rate to 25%
appears to benefit the rich -- like himself and his family -- more
rather than the middle- or low-income earners. Those who make millions
and billions don’t really bother with tax brackets, as they will always
be on top. But cutting their tax rate to 25% from 32% will surely save
them a lot of money.
(Send comments to matort@yahoo.com.)
source: Businessworld
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