House eyes lower income tax by 2016

MANILA, Philippines - The House of Representatives is aiming to reduce income tax rates for both individual and corporate taxpayers before President Aquino’s term ends on June 30, 2016.

“I think we ought to have lower income tax rates in place by January 2016. Lower income tax is quite long overdue. I strongly believe the President and the Department of Finance realize that we have to adjust the rates now. This will be beautiful for the economy,” Marikina Rep. Romero Quimbo said yesterday.

Quimbo, who is ways and means committee chairman, said he is inclined to support the proposal of his Senate counterpart, Juan Edgardo Angara, to cut individual income tax rates to 25 percent from the current 32 percent.

At the same time, he said the House wants to be responsible about the proposal so it won’t result in a big revenue loss for the government.

He said he and his colleagues would work on revenue-raising measures, including “scrapping the tax privileges of industries that no longer need these, increasing mining taxes and modernizing the Bureau of Customs.”

He said his committee is now drafting the lower income tax bill in coordination with Angara’s panel and the National Tax Research Center, since the measure has to emanate from the House.

“We’ve been working on this the last three weeks. This bill will be the mother bill to be taken up. It is being filed in coordination with the chair of the Senate’s committee on ways and means, Sen. Angara,” he said.

The two were colleagues in the House when Angara was an Aurora congressman. They both served as spokespersons of the prosecution panel in the Senate impeachment trial of then chief justice Renato Corona.

Quimbo said the objective of the House in working for the reduction of income tax rates is to promote the inclusive growth agenda of President Aquino.

“The objective is to carry out the President’s vision to have a growth that’s inclusive, growth that workers can feel,” he said.

He said lower income tax would mean more disposable income for workers, who could either spend the money or save it.

Valenzuela City Rep. Magtanggol Gunigundo I, a deputy majority leader, is the author of the newest reduced income tax bill in the House.

Gunigundo said his proposal would exempt workers earning up to P180,000 a year from taxation.

He said it would add more than 2.4 million families to millions of minimum wage earners who are exempted from income tax.

He said these additional tax-exempt individuals would include government personnel with Salary Grade 8 like policemen with Police Officer 1 rank (P14,834 basic pay), soldiers with the rank of Private (basic pay also P14,834) and many state workers whose pay level is P15,000.

“The reduction in income tax rates will stimulate the economy by providing individual taxpayers more disposable income, which they can either save or spend in the engagement of services or purchase of goods that are subject to the 12-percent value added tax (VAT),” he said.

He added that since people tend to spend their disposable income, there “would be increased demand for services and goods, and businesses would have to cope with this by hiring more workers to increase production.”

Gunigundo conceded that his proposal would result in a P90-billion revenue loss for the government.

“But the initial revenue drop should not deter Congress from reducing income tax rates. The bigger picture, which is the Philippine economy, will in the long run gain much more in terms of lower unemployment, more VAT collections, a happier people and more productivity,” he said.

He said the Department of Finance and the Bureau of Internal Revenue would treat his projected P90-billion drop in collections as a loss on the part of the government.