Yap pushes for reforms on income tax system

TAGBILARAN CITY, Philippines — Representative Arthur Yap (3rd district, Bohol) filed House Bill 39 reforming the present personal income tax system to bail out low-income earners from the burden of inequitable taxation.

Yap’s House Bill 39, revives House Bill 4849 that he filed in the 16th Congress, that sought to amend a section of Republic Act 8424 (National Internal Revenue Code of 1997), as amended by RA 9504.

In his latest bill, Yap proposed the adjustment on “the levels of net taxable income and reducing the nominal tax rates in the computation of individual income tax.”

He said this amendment “will effectively lower the taxes on the low-income earners and allow them a higher net income, thus increasing their purchasing power,” while ensuring the government “will be able to collect a larger share of income from those who can afford to pay more.”

For both objectives, Yap said there will be “no additional financial burden to be imposed on employers.”

The tax reform bill will review and update the decades-old income tax rates, under Section 24 of RA 9504, which has an “absurd scenario” on an employee who, upon getting a higher salary above the minimum “will jump to paying a higher rate of tax payable,” said the congressman.

The “absurdity” in the present income tax scheme negates any increase that would be granted to an employee, he said, effectively discouraging an employee to ask for a salary that is only a little higher than the minimum.

Citing constitutional provisions, Yap said taxation shall be uniform and equitable, and that Congress shall evolve a progressive system of taxation.

“Income taxation is progressive if people with higher incomes pay more than people with lower incomes. Personal income tax rates vary as such,” he said. While the country’s economy is growing however, the ordinary wage earners “are still reeling from the pinches of rising prices of commodities and high income taxes.”

Yap said the government “is always faced with the dilemma of satisfying the growing demands of the labor sector while at the same time not pushing businesses, particularly the small and medium enterprises which comprise a larger portion of the economy, into bankruptcy.”

In House Bill 39, Yap proposed a tax formula where minimum wage plus P1 but not over P100,000 will get a two percent exemption. Those with minimum wage plus P100,000 but not over P300,000 will be exempted by P100 plus five percent of the excess.

A minimum wage plus P300,000 but not over P500,000 the exemption will be by P500 plus 10 percent of the excess; and a minimum wage plus P500,000 but not over P1 million, the exemption will be by P2,500 plus 15 percent of the excess.

Minimum wage plus P1 million but not over P5 million will be exempted by P8,500 plus 20 percent of the excess; minimum wage plus P5 million but not over P10 million will be exempted by P22,500 plus 25 percent of the excess; minimum wage plus P10 million but not over P50 million will be exempted by P50,000 plus 30 percent of the excess; and minimum wage plus over P50 million will be exempted by P125,000 plus 32 percent of the excess. (FREEMAN)