‘Tax cuts to boost workers’ take-home pay’
Despite the clock ticking and political season fast approaching, Senator Sonny Angara on Sunday said he was still pushing for an income tax reform to put more money in the pockets of Filipino people.
With the enactment of bills calling for tax reforms especially the lowering of income tax rates and the adjustment of brackets, its immediate impact would be higher take- home pay for Filipino workers in the public and private sectors.
“Government has money it cannot even spend because of absorptive capacity issues of departments. We could’ve done it already so why not a win-win reform where the working class taxpayers are at the center?” he said.
But time is running out on the tax reform measures as the Senate and House of Representatives would adjourn sessions next month.
House Speaker Feliciano Belmonte Jr. said the measure seeking to lower income tax rates in the country would not likely get passed before Congress adjourns in October because of the lack of time to present an alternative to recoup the projected P30-billion loss in revenue.
Still, Angara was not about to give up his pitch for tax reforms.
At 32 percent, Angara said, the Philippines has the second-highest individual income tax rate in Southeast Asia, next to Thailand and Vietnam’s 35 percent.
Currently, the income tax is the highest deduction in the salary of an average Filipino worker.
Moreover, the country’s current individual income tax bracket has remained unchanged since 1997 amid rising inflation.
“We are talking about as little as P800 a month for a new public school teacher. Are we going to deprive them of this amount?” asked Angara.
He said the government will also benefit because the workers will definitely spend the money, while government seems to be having underspending problems, having hundreds of billions of unused balance last year.
He noted that the taxpayer spending will boost GDP, which at 5 percent is below government target (7-8 percent), and will also boost government revenue because of the VAT on spending.
“Because we haven’t indexed our tax brackets/tax rates since 1997, a new public school teacher’s take-home pay (in real peso terms, meaning adjusted for inflation) is even less today than in 1997 as a result of being in a higher tax bracket due to inflation—this is despite an increase in their salary through the salary standardization law,” he added.
He said the government must offer real solutions to regular people otherwise growth is just a facade masking inequalities.
Angara said he is confident that President Aquino would “see the wisdom” in the tax reform bills and move for their enactment as his “best goodbye gift to the Filipino people when he steps down from office” next year.
Already, Angara has worked for the enactment of Republic Act 10653 that increased the tax exemption of the 13th month pay and other bonuses to P82,000 from P30,000, enabling at least 500,000 employees in the public and private sectors to get much bigger bonuses this year.