‘Income tax cut a matter of justice’

MANILA, Philippines - The opposition in the House of Representatives kept up the pressure yesterday for President Aquino to change his mind on the proposed reduction of income tax.

Bayan Muna Rep. Carlos Zarate appealed to Aquino’s sense of fairness, saying the lower income tax proposal “is a matter of justice for millions of salaried workers.”

“The President rejects it to keep the country’s good credit rating numbers, but for private sector employees and low-paid government personnel, lightening their tax burden only means recovering their inflation-eroded purchasing power,” he said.

He said the present income tax rates have not been adjusted since 1997.

Zarate said while workers have been periodically granted salary increases to enable them to cope with inflation since 18 years ago, such adjustments have gone to tax payments with the failure of the government to correspondingly adjust tax rates.

“That is because their higher income have pushed them to higher tax rates. Their salary increases have been eaten up by taxes,” he added.

He cited the study made by the Tax Management Association of the Philippines showing that a worker who paid 10 percent in income tax in 1997 now pays 20 percent.

He said the proposal that Aquino has repeatedly rejected calls only for adjusting tax rates for inflation.

He pointed out that the measure aims to allow workers to recover the purchasing power they have been losing to higher taxes since 18 years ago.

“It’s a fair and reasonable proposal. We did that with the excise taxes on the so-called sin products – tobacco and alcohol – because the President and his economic managers told us that the rates have not been adjusted for nearly two decades. Now they don’t want to do it with income taxes,” he stressed.

Finance Secretary Cesar Purisima and Bureau of Internal Revenue Commissioner Kim Henares have warned lawmakers that reducing income taxes would mean a revenue loss of P30 billion for the government.

Zarate suggested what he described as a simple solution to the revenue loss problem: scrapping a P30-billion appropriation in the 2016 budget intended as a guarantee fund for private companies with government contracts.