‘Junk secrecy law first before income tax cut’

MANILA, Philippines - Malacañang will be willing to lower income tax rates only if Congress can assure President Aquino that restrictive bank secrecy laws are lifted before he steps down in June 2016 and if tax evasion is covered by money laundering laws.

“If the (legislature) will pass a law to lift bank secrecy for tax purposes and make tax evasion a predicate crime, there might be some room to adjust,” Presidential Communications Operations Office Secretary Herminio Coloma Jr. quoted Bureau of Internal Revenue (BIR) Commissioner Kim Henares as saying.

The BIR chief’s pronouncements were in reaction to Sen. Juan Edgardo Angara’s push for lower tax rates for workers. Several lawmakers, including Speaker Feliciano Belmonte Jr. and Marikina Rep. Miro Quimbo, were also pushing for tax reprieve for ordinary wage earners.

Henares stated the administration is “for status quo” as revenue losses would certainly arise from cuts in tax rates – unless new revenue measures are put in place.

“We (the government) are not against lowering the tax rates per se. But we have to look at the overall effect to the country,” the BIR chief stressed.

“The government remains firm on its stand on maintaining the present tax system. We reiterate that taxes are the life blood of the economy,” Coloma said.

“Government must have a steady revenue stream to ensure the continued implementation of essential programs on social protection, poverty alleviation, employment generation, educational competitiveness, housing, universal health care; as well as for public infrastructure and national defense and security,” he added.

Meanwhile, Senate President Franklin Drilon said yesterday it would be up to the House of Representatives to work on approving a proposed measure to adjust the salary brackets for tax reform purposes.

Drilon said the ball is now in the House where any tax-related measure should originate.

Drilon’s statement came after Angara and Quimbo announced they would look for other options to lower the impact of income tax rates on fixed-income individuals.

The Palace and the Department of Finance have shot down proposals to put the tax rates at 25 percent.

Angara said he is open to adjusting the tax brackets to cope with inflation as the committee on ways and means, which he chaired, continues to look for ways to allow the country’s ordinary wage earners to enjoy bigger take-home pay.

Angara noted that the current system is outdated, noting that the maximum 32-percent tax rate is imposed on employees who enjoy an annual salary of P500,000 and above. The same scheme is applied to millionaires, the senator said.

Belmonte assured the public last Sunday that the House of Representatives would continue working for the passage of an income tax reform bill aimed at boosting the purchasing and saving power of ordinary workers. – Christina Mendez