Income tax cut? I’ll think about it, Noy tells SB, Drilon

MANILA, Philippines – President Aquino remains cool to a proposal to lower individual income taxes despite a personal appeal from Senate President Franklin Drilon and Speaker Feliciano Belmonte Jr. on Monday.

Belmonte and Drilon met with Aquino and his economic managers led by Finance Secretary Cesar Purisima at Malacañang to persuade the President to agree to a measure that adjusts income tax rates to inflation.

The current tax rates were set in 1997 and lawmakers said personal incomes have eroded since then. Aquino earlier said the measure would lead to P30 billion in revenue losses.

There were reportedly moments when the discussions became heated. In the end, Aquino remained unmoved by the presentation of the two congressional leaders.

“We made our pitch and after that, the President said, ‘let’s think about it,’ and that’s it. So I’m still awaiting what the decision will be. But let me just say that both Frank Drilon and myself made a strong pitch for our proposal,” Belmonte told reporters.

He said Purisima and Bureau of Internal Revenue Commissioner Kim Henares also asked for the passage of a bill lifting the bank secrecy law, apparently in exchange for their support for the income tax measure.

“We’re just talking about the values (index) that will be updated to inflation. We don’t seek the connection with that (lifting of bank secrecy). But Drilon and I were very vehement because fixed income earners have their taxes automatically deducted. We told the BIR to just run after tax evaders,” he said.

Belmonte said it would be better if Aquino certifies the bill as urgent given the little time left for the 16th

Congress to tackle bills because of the 2016 elections.

Leyte Rep. Ferdinand Martin Romualdez, leader of the so-called independent bloc, lauded Belmonte and Drilon and appealed to them not to give up for the sake of ordinary workers.

“They should not give up and just continue convincing the President because this is a genuine malasakit (compassion) to our workers,” Romualdez said.

“Their efforts are admirable and laudable. They should continue with this action to put pressure on Malacanang to support the bill’s passage,” he said.

He renewed his call for the Senate and the House of Representatives to pass the measure and let Aquino decide whether to heed the call or suppress the clamor of his “bosses.”

Earlier, Sen. Juan Edgardo Angara and Marikina City Rep. Romero Quimbo met with Aquino to make the same presentation but they were also told that the bill needed further study by economic managers.

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 32 percent.

Quimbo said the measure did not even touch the actual rates but simply adjusted the figures to inflation.

He said lawmakers are also fully aware of the bill’s implications on government revenues that is why the chamber passed revenue-generating measures.

He said the Senate and the House have ratified the Tax Incentive Management and Transparency Act, which is expected to generate at least P20 billion according to the DOF itself. The amount is two-thirds of the feared P30 billion revenue loss arising from the lower income tax.

He said conservative estimates from government economists showed that the lowering of individual taxes based on the bill would immediately generate P4 billion from value-added tax owing to increased spending.

Valenzuela City Rep. Sherwin Gatchalian, one of the backers of the measure, said the bill should not be a casualty of politics as the House is led by pro-administration lawmakers, who appear to be afraid of angering Aquino.

He said he found it puzzling that while Malacañang was fretting over the P30 billion in projected revenue losses, the Aquino administration was estimated to have underspent about P400 billion for this year alone.

He said it has been widely recognized and admitted by Malacañang that the government has been underspending since 2010. This has largely contributed to the slowdown in growth.

“I’m sure the administration cannot spend the P3.002 trillion it is asking Congress for next year’s budget,” Gatchalian said.