Tax-bracket reform bill filed for 17th Congress

A MEASURE seeking to adjust the individual income tax brackets to inflation was filed yesterday at the House of Representatives, as part of legislation to be decided by the 17th Congress.

Marikina City Rep. Romero S. Quimbo (2nd district) filed House Bill 20, which proposes the indexation of tax brackets to inflation, as determined by the Consumer Price Index.

“While my initial proposal was to overhaul the entire income tax system, the adjustment of brackets to inflation is the most urgent step in our quest for genuine reform,” said Mr. Quimbo in a statement.

Under the proposed Taxable Income Brackets, those earning below P21,613 will have a 5% tax rate; those earning more than P21,613 but not over P64,839 will be taxed at P1,080 plus 10% on the amount in excess of P21,613; those earning more than P64,839 but not over P151,290 will be taxed P5,402 plus 15% of the amount in excess of P64,839.

Those in the more than P302,581 but not over P540,323 bracket will be taxed P48,628 plus 25% on the amount in excess of P302,581; those falling between P540,323 and P1,080,645 will be taxed P108,063 plus 30% of of the amount in excess of P540,323; and those in the P1,080,645 and over bracket will be taxed P270,160 plus 32% of the amount in excess of P1,080,645.

The proposed measure also provides for an automatic adjustment of the tax brackets to inflation every three years.

Mr. Quimbo noted that 6.6 million Filipino workers “bear the brunt of paying individual income tax” according to Bureau of Internal Revenue (BIR) records.

“This means only 16% of our 22.2 million wage and salary workers serve as the milking cows of BIR. We cannot allow the suffering of our workers to perpetuate under our archaic and unfair tax system. We must ensure that they are able to live comfortably to provide for their families,” Mr. Quimbo was quoted as saying in a statement.

Mr. Quimbo’s bill is consistent with his previous approach of reforming the tax system in phases -- first brackets, then tax rates -- to minimize risks to the country’s fiscal health.

“The other phases would include a fixed but lowered tax scheme for the self-employed and professionals as well as a reduction of corporate income tax rate to 25% to make the country competitive,” he added.

Mr. Quimbo pushed an income tax reform in the 16th but “failed due to the opposition of the Department of Finance.” -- Raynan F. Javil

source:  Businessworld