MANILA, Philippines - Another member of the House of Representatives has proposed a reduction in the income tax rate for workers and employees and other individual taxpayers.
In Bill 4273, Quezon Rep. Angelina Tan is proposing that the income tax rate for individual earners be reduced from 32 percent to 15 percent next year and to 13 percent starting in 2016.
She said her proposal would help the country’s workforce cope with rising consumer prices.
It would also jibe with the integration of the Association of Southeast Asian Nations (ASEAN) in 2015, when the region would just be one big market and production base, she said.
When ASEAN becomes a single market, she said skilled labor would locate itself where it would earn best.
Thus, there is a need for the Philippines to reduce its individual income tax rate so it could attract the kind of human capital it needs for faster economic development, she stressed.
Tan pointed out that among the 10 ASEAN members, the country has the third highest tax rate at 32 percent, next to Thailand’s 37 percent and Vietnam’s 35 percent.
She said Indonesia’s highest rate is 30 percent, Malaysia’s is 26 percent, and Laos’ is 24 percent, while Singapore, Cambodia and Myanmar tax their citizens at a maximum of 20 percent.
Earlier, Valenzuela Rep. Magtanggol Gunigundo I filed a bill that would reduce income tax rates for both individual and corporate taxpayers.
Gunigundo is proposing to exempt employees earning up to P180,000 a year or P15,000 a month from taxation.
He said his proposal would add more than 2.4 million families to millions of minimum wage earners who are exempted from income tax under the present tax law.
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) and soldiers with the rank of Private (basic pay also P14,834).
“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.
For corporations, Gunigundo is proposing a flat tax rate of 15 percent based on gross income. The current maximum is 30 percent.
He said the flat rate is a simpler scheme and would eliminate loopholes and discretion on the part of taxpayers and tax collectors.
The Department of Finance and the Bureau of Internal Revenue have promised to look into the income tax reduction proposal but made it clear that they oppose any measure that would result in a revenue loss.
The two agencies said Congress would have to find other revenue sources if it decides to reduce income taxes.