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Aquino urged: Lower income taxes as goodbye gift

President Benigno S. Aquino III presides over the Cabinet Budget Presentation meeting at the Aguinaldo State Dining Room of the Malacañan Palace. Malacañang Photo Bureau/Lauro Montellano, Jr.

MANILA, Philippines - Sen. Juan Edgardo "Sonny" Angara is looking forward to the statement of President Benigno Aquino III regarding the lowering of individual income taxes in his last state of the nation address (SONA).

The senator hopes that the president would back such bills that will revamp tax brackets as his "best goodbye gift to the people."

Angara, who heads the Senate ways and means committee, authored a bill compressing the net taxable income brackets and lowering tax rates.

The Philippines has the second highest income tax rate in the region with 32 percent following Thailand and Vietnam, both with 35 percent. The Philippines also has the highest value added tax with 12 percent.

"We need to think ahead and be competitive in the region but more importantly, we must give the Filipino people a break. Currently, a policeman and a teacher whose net taxable income is P150,000 are taxed at the third highest rate," Angara said.

Angara added that the current individual income tax bracket of the country has not changed since 1997 despite the increase of the consumer price index.

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"Kung hahayaan lang natin ito at hindi tayo agad kikilos upang amyendahan ang sistema ng ating pagbubuwis, malamang ay sa mga susunod na taon, ang tax rate ng ating mga guro, nars at kapulisan ay sintaas na ng tax rate ng mga milyonaryo at bilyonaryo sa bansa," Angara said.

The senator pointed out that the Department of Finance is open to review and amend tax rates and brackets. He noted that the president's mention of tax reforms in his SONA would gain support from lawmakers.

"It will also be good for the economy. It is always better to plow money back in circulation, where it can stimulate the production and consumption of goods. Sometimes, instead of government doing the spending for the people, let the people do the spending themselves," the senator explained.

He added that lower tax rates would also attract human capital and prevent the migration of Filipinos to other countries.

Last February, Aquino approved the bill that increases the tax exemption cap for bonuses. The new law mandates that employees receiving 13th month pay, Christmas bonuses and other benefits not exceeding P82,000 to be exempted from tax.

RELATED: Senators laud signing of law for higher tax cap on bonuses

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