Tax consultants' organization bats for lower income tax rates, inflation-sensitive brackets

MANILA – The country’s organization of tax consultants and advisers is pushing for legislation that will index income tax brackets to inflation and reduce tax rates.

In a position paper filed with the Ways and Means committees of the House and the Senate, the Tax Management Association of the Philippines (TMAP) said it supports the periodic adjustment of income tax brackets by pegging them to inflation; a move that will “increase disposable income, the living standards of our countrymen and fuel the economy.”

According to TMAP, such an income tax system should provide a zero tax rate for marginal income earners. At present, those earning P10,000 a year are taxed at 5 percent even if their income is no higher than the minimum wage.

Also, TMAP proposed aligning the country’s tax rates with those of its Asean neighbors, where the top rate for individuals ranges from 20-30 percent.

"A comparison of the individual tax rates prevailing with Asean neighbors shows that the 32 percent tax on taxable income of P500,000 is the highest in the region. In the Philippines, income in excess of P500,000 is taxed at 32 percent while, in our Asean neighbors, the tax on income in excess of P500,000 is substantially lower," the group said.

Besides reducing the tax rates, TMAP also called for a simpler process of taxing individuals to encourage tax returns filing and thus broaden the tax base.

SOURCE:   InterAksyon