Noy to meet SB, Drilon on lower income tax

MANILA, Philippines - Speaker Feliciano Belmonte Jr. and Senate President Franklin Drilon will meet with President Aquino on Monday to discuss moves in Congress to reduce income tax.

Belmonte told reporters yesterday after the monthly consultation meeting of leaders of Congress that he and Drilon would take up with Aquino the bill that would adjust taxes taking into account inflation since 1997.

“The Senate president and I will meet the President on Monday, and among the important things we talked about this morning is income tax. The version pending with us is an indexation of the values without changing the rates,” Belmonte said.

Marikina Rep. Romero Quim-bo, chairman of the House of Representatives ways and means committee and principal author of the indexation bill, said it seeks to adjust the amounts of taxable income for inflation for nearly 20 years that these have not been adjusted.

He said workers’ incomes have gone up over the years, but the amounts of taxable earnings have not been correspondingly increased.

“Thus, workers have been pushed to higher income brackets and are forced to pay higher rates,” he said.

He added that the indexation-to-inflation measure would result in a P30-billion revenue loss for the government.

Quimbo’s Senate counterpart, Juan Edgardo Angara, has his own version of the tax adjustment bill in the Senate.

Aquino has called for a “comprehensive approach” to tax reform, telling lawmakers that if they take away revenues, they should equip the government with the means to recoup such revenues.

He reminded them that the government is still operating on a budget deficit, which he said would widen without “compensatory measures.”

Administration officials said a bigger deficit would mean higher borrowing costs for the treasury and the private sector.

Higher lending rates would eventually hurt the economy and workers, they said.

Quimbo said they did not discuss any revenue recovery measure as Aquino, Belmonte and Drilon could take this up on Monday.

Quimbo’s bill proposes the following amounts of taxable incomes and rates: not over P21, 613, five percent; from P21,614 to P64,839, 10 percent; P64,839 to P151,290, 15 percent; P151,291 to P302,581, 20 percent;

From P302,582 to P540,323, 25 percent; P540,323 to P1,080,645, 30 percent; and over P1,080,645, 32 percent.

The present law provides for the same rates and tax brackets.

However, the taxable amounts have doubled in the pending indexation bill.

Currently, the lowest taxable income is P10,000, which is subject to a rate of five percent. An annual income of P500,000 is taxed at 30 percent, while earnings over P500,000 are levied 32 percent.