Lower income tax bill not yet dead – lawmaker

MANILA, Philippines – The proposal to reduce individual and corporate income taxes is still alive in the House of Representatives despite the lack of support from Malacañang and the Department of Finance (DOF), the principal author of the measure said yesterday.

Marikina City Rep. Romero Quimbo, chairman of the House committee on ways and means, sought to clarify reports that the chamber had shelved the reform bill adjusting individual and corporate income taxation tiers that remained unchanged since 1997 despite inflation.

“We’re just waiting for a real, genuine and credible response from the DOF, their input before we approve the bill in the committee,” Quimbo said in a telephone interview. “There’s still time to pass this.”

House leaders earlier said the plenary could not act on the proposal since the committee has yet to endorse it.

Speaker Feliciano Belmonte Jr. had said he did not want “election-driven” reforms but a tax measure that was comprehensive.

Quimbo explained that the tax reform effort in the House was in three stages, and Belmonte was totally supportive of the immediate passage of the pending measure, which is the first stage.

He said during their meeting in Malacañang with Sen. Juan Edgardo Angara, author of the Senate version, that President Aquino instructed Finance Secretary Cesar Purisima to give an official position to Congress.

He said the figures used by the House panel were taken from the DOF, the Bureau of Internal Revenue (BIR), and other agencies.

“If the DOF decides to dribble the issue, then we’ll be forced to pass the bill in the committee,” Quimbo said, adding Purisima has two weeks to make his response.

He said the bill has long been known to the DOF and the BIR, which were asked by the panel sometime ago to give their inputs.

The House is expected to pass the proposed P3.002-trillion national budget for 2016 on Friday and go on a break for the filing of certificates of candidacy for next year’s elections.

Quimbo said the chamber could vote on the measure on second reading when it resumes session on Nov. 3.

Another leader of the chamber said while the bill has the full support of members of the House, Malacañang is exerting pressure not to pass it and not make it an election issue.

Under the bill, those earning P180,000 and below a year would be exempt from paying taxes, while those who earn from P180,000 to P500,000 would pay nine percent.

Individuals whose yearly income is from P500,000 to P10 million would pay 17 percent, while those with more than P10 million annual income will have to pay 30 percent.

At present, those earning P500,000 and above are treated the same and are taxed at 30 percent.

“There should be higher tax compliance for professionals and entrepreneurs. We can’t sleep on this. The income tax rates are stuck in 1997 levels. That means that whether you are earning P500,000 or P50 million annually, you pay the same tax rate of 30 percent,” Quimbo said.

Because of the stagnant rates, he lamented that a soldier currently pays 15 to 20 percent income tax when he or she should only pay five percent, while a new teacher who earns P20,000 has to pay as much as 20 percent income tax.

“This is simply not right because the purchasing power of P20,000 now is not the same as before. You won’t be able to buy much with that. Those being hit are high school principals and mid-level managers,” he said. 

Sen. Francis Escudero scored anew the Aquino administration yesterday for its pragmatic stance on lowering the income taxes of fixed income workers when it has underspent about P623 billion since 2011.

Escudero noted that the P30 billion, projected by the DOF as losses arising from the proposed income tax rate reduction, is definitely way below the unspent funds floating in government coffers.