CEBU, Philippines - Business and industry leaders in Cebu have joined renewed calls to trim the country's income tax rates, which is deemed to be one of the highest in South East Asia.
Alice Uy, president of Financial Executives Institute of the Philippines (Finex)-Cebu, said individual and corporate income taxes must be cut.
"It (lowering the income tax) is long overdue. If only these taxes were lowered even a few years back, we would have a better economy," Uy told The FREEMAN in a phone interview yesterday.
Uy believed that lower income taxes will help the country achieve inclusive growth, saying it will allow workers have more to spend and businesses generate more capital for expansion. As a result spending and business expansion will help spur the economy, she said.
This will also allow taxpayers keep more of their income, which would sustain the purchasing power of people.
The highest tax rate for corporations is 30% while for individuals is 32%. Currently the country's income tax rates range from 32% for workers earning at least P500,000 per year to 5% for those earning at least P10,000 a year. Tax rates were last set in 1997.
Uy urged the Senate and Congress to work on the priority bills seeking for the income tax reduction. The Finex official emphasized that this must be a priority legislation.
Mandaue Chamber of Commerce and Industry (MCCI) President Donato Busa said it's about time for government to consider lowering the tax rates as it has already improved its tax collection system.
Busa stressed that such move will significantly have a positive impact on small businesses and Filipino workers.
"It will have a large effect down the line. It will boost the economy. People will have more income and savings to spend for quality food [and other things]," Busa said in a separate interview Friday.
"Lowering it will shore up poverty alleviation," he believes. "It will help especially the lower and middle-income people.
The businessman pointed out that now is the appropriate time for the tax authority to bring down income tax charges because it already has established a "good collection mechanism".
Busa said the MCCI is going to support any move that pushes for reduced income tax.
When asked for his position on the proposed tax cuts, Cebu Bankers Club (CBC) President Maximo Eleccion also said bids to adjust taxes are generally good for all taxpayers.
"[It is a] very much welcome move by legislators but a challenge to the BIR (Bureau of Internal Revenue ) to work efficiently to meet collection targets," Eleccion noted in a message to The FREEMAN.
Filipino-Cebuano Business Club (FCBC) President Rey Calooy believed that government revenues have improved due to the increasing investments and economic activity in the country.
If only corruption in the government will be minimized or fully eradicated, Calooy said the government will have a stable and improved income.
For Uy, Filipinos have already a "negative connotation" when it comes to taxes due to the corruption in government.
"People will always question asa mapunta ang taxes," Finex's Uy said. She said that if government shows real political will, businesses and taxpayers in general will have regained confidence on their government.
Calooy also added the present administration must look into the pending measures seeking for tax cuts, noting that this will be one of President Benigno Aquino III's legacies before he steps down on June 30 next year.
Calooy further added the government has many types of taxes -- such as value-added tax (VAT) and excise taxes -- to depend on aside from income taxes to boost its revenues. Other types of taxes include capital gains tax, documentary stamp tax and percentage tax, among others.
The Congress' Committee on Ways and Means is presently evaluating at least 13 proposals proposing for income tax adjustment.
Counterpart measures are likewise pending in the Senate.
Senator Francis Escudero earlier urged President Aquino to push Congress to make the lower income tax bill a "priority measure and veto-proof".
The Department of Finance (DoF) previously said that it seeks a comprehensive review of the current taxation system to make needed reforms.
The Finance agency also wants a holistic solution for an effective tax system and for removal of rules and laws that prevent improved revenue collection. (FREEMAN)