Senate starts work on lowering income taxes tomorrow

Lowering income taxes may provide some welcome relief to those burdened by the rising cost of living.

The Senate will start hearings tomorrow on proposals to reduce individual income taxes to provide relief for low-income earners.

Senate ways and means committee chairman Sen. Ralph Recto said that the hearings would focus on three bills proposed by Senators Jinggoy Estrada, Juan Ponce Enrile and himself.

Under the Estrada bill, individuals earning P10,000 or less will be exempted from paying any income taxes.

For those earning over P10,000 but not over P30,000, the tax imposed would be equivalent to five percent of the excess over P10,000.

Other salient points in the Estrada bill include provision that income tax rates be staggered according to the size of the taxpayer’s income:

Over P30,000 but not over P70,000: P1,250 plus 7.5 percent of the excess over P30,000.
Over P70,000 but not over P140,000: P4,250 plus 10 percent of the excess over P70,000.
Over P140,000 but not over P250,000: P11,250 plus 12.5 percent of the excess over P140,000.
Over P250,000 but not over P500,000: P25,000 plus 15 percent of the excess over P250,000.
Over P500,000 but not over P1 million: P62,500 plus 17 percent of the excess over P500,000.
Over P1 million but not over P2 million: P125,000 plus 20 percent of the excess over P1 million.
Over P2 million: P250,000 plus 32 percent of the excess over P2 million.
In the Enrile bill, individuals earning P10,000 or less would be imposed an income tax rate of 2.5 percent.
Over P10,000 but not over P30,000: P250 plus five percent of the excess over P10,000.
Enrile’s tax rates are:
Over P30,000 but not over P70,000: P1,250 plus 7.5 percent of the excess over P30,000.
Over P70,000 but not over P140,000: P4,250 plus 10 percent of the excess over P70,000.
Over P140,000 but not over P250,000: P11,250 plus 12.5 percent of the excess over P140,000.
Over P250,000 but not over P500,000: P25,000 plus 15 percent of the excess over P250,000.
Over P500,000 but not over P1 million: P62,500 plus 17.5 percent of the excess over P500,000.
Over P1 million but not over P2 million: P150,000 plus 20 percent of the excess over P1 million.
Over P2 million but not over P4 million: P350,000 plus 22.5 percent of the excess over P2 million.
Over P4 million but not over P8 million: P800,000 plus 27.5 percent of the excess over P4 million.
Over P8 million but not over P10 million: P1.8 million plus 27.5 percent of the excess over P8 million.
Over P10 million but not over P12 million: P2.35 million plus 30 percent of the excess over P10 million.
Over P12 million: P2.95 million plus 32 percent of the excess over P12 million.
Under the Recto bill, individuals earning less than P10,000 must pay income tax of 3.5 percent. The other proposed tax rates are as follows:
Over P10,000 but not over P30,000: P350 plus seven percent of the excess over P10,000.
Over P30,000 but not over P70,000: P1,750 plus 10.5 percent of the excess over P30,000.
Over P70,000 but not over P140,000: P5,950 plus 14 percent of the excess over P70,000.
Over P140,000 but not over P250,000: P15,750 plus 17.5 percent of the excess over P140,000.
Over P250,000 but not over P500,000: P35,000 plus 30 percent of the excess over P250,000.
Over P500,000: P110,000 plus 32 percent of the excess over P500,000.
"Lowering income tax rates will benefit at least 13.5 million, or 86 percent, of Filipino families who have annual salaries below P250,000," Recto said.

"Presently, income taxes paid by an individual with a net income of P250,000 are almost a fifth of that individual’s net income. That leaves not much to spend for basic needs," Recto added.

He said a significant number of wage earners are unable to benefit from the wage hikes mandated by the wage boards, saying it would be better to lower the income tax rates.