Bill seeking a flat tax rate scheme filed

A BILL WAS FILED at the House of Representatives seeking to provide a flat tax scheme in order to reduce attempts to evade paying the right taxes.

House Bill (HB) 4600 filed by Quirino Rep. Dakila Carlo E. Cua, or the proposed Flat Tax for Professionals Act, seeks to amend Section 24 of the National Internal Revenue Code (NIRC) of 1997 by recommending a final flat tax of 10% to be imposed upon the taxable income of all professionals within and outside the country.

In his 2011 State of the Nation Address, President Benigno S. C. Aquino III mentioned that “according to the Bureau of Internal Revenue (BIR) we have around 1.7 million self-employed and professional taxpayers who paid a total of P9.8 billion in 2010, and must have earned only P8,600 a month (which is below the minimum wage) because of the low income taxes they paid that year.

“This representation hopes that simplifying the taxes for professionals by introducing a flat tax scheme will significantly increase their tax contribution, thereby increasing government revenue,” Mr. Cua said in the bill’s explanatory note.

“In its quest for additional tax revenues, the BIR continues to look to widen the country’s tax net, and has been targeting in particular, self-employed professionals, such as doctors, lawyers, accountants and other high-earning, self-employed individuals as it has already been pointed out that a problem with tax compliance still exists in their sector of the economy,” Mr. Cua further said on the bill.

The proposed measure also aims to amend Section 22 of the NIRC by including a definition of professionals as all individuals who require examination or license from a government agency.

The bill shall mandate the BIR to provide a unified list of professionals to be included in the flat tax scheme.

Upon enactment, the provisions of the House bill shall take effect beginning the taxable year of 2015.

For the BIR’s part, Commissioner Kim S. Jacinto-Henares said in a telephone interview that reducing tax rates would mean less funding for essential government expenditures such as infrastructure and health services, among others.

“What we’re trying to do is enforce the tax law. Where will you get money to develop the things the country needs?,” Ms. Henares said during a phone interview.

She also added that implementing a flat tax rate “is not effective [against] tax evasion.”

The BIR expects to collect P1.456 trillion this year, 16.16% or P202.651 billion higher than the P1.253-trillion goal last year.

The lion’s share of collections will still comprise of income tax, estimated at P829.759 billion, the BIR earlier said. -- Jacqueline P. Miranda

source:  Businessworld