BIR told: Submit proposed lower income tax rates by July
MANILA, Philippines - Senator Sonny Angara hopes that the Bureau of Internal Revenue (BIR) will submit its proposal to lower income tax rates in July or sooner in time for the State of the Nation Address (SONA) of President Benigno Aquino III.
Angara said this is to enable the President to include the BIR proposal in his "wish list" that he will ask Congress to consider during his SONA later this year.
"The dynamics in legislation is that it will take a year for a bill to be passed into law. So I think submitting it this July will fit just right in the congressional template of doing things," Angara said.
"And, even if the BIR is thinking of a delayed effectivity date for the law, there is still merit on the idea of submitting its proposal way ahead," he added.
Angara is the author of Senate Bill No. 2149 which aims to reduce the rates of individual income tax from the current 32 percent to 25 percent by 2017.
The proposed law will also adjust the individual income tax brackets.
"The basis of payment of tax should be on the capability of pay. Many of our countrymen are already in dire poverty," Angara said, noting that 30 to 40 percent are living below the poverty line.
Read: Angara pushes for lower income tax
Aside from Angara, Senators Ralph Recto and Bam Aquino have also filed measures seeking to reduce lower personal income tax rates.
In his bill's explanatory note, Recto said when the present individual tax brackets and rates were imposed in 1997, the cost of goods was half than what it is now.
"The Consumer Price Index from 1998 to May 2013 almost doubled. The basket of goods costing P100 in 1998 was worth P196 in May last year," he said.
Recto said Section 24 of the National Internal Revenue Code of 1997 should be amended to reflect the erosion in the value of money.
Recto is batting for a new schedule that would impose no tax on net income of below P20,000.
While emphasizing the need for thorough study, BIR Commissioner Kim Henares said last week that they would come up with proposals to lower income tax rates.
"This is something that needs to be addressed in a holistic manner," she said.
"This year, we’re not in favor of doing anything about lowering tax rate. What we’re concentrating on is plugging the loopholes and rationalizing things like the fiscal incentive rationalization, the Tax Information Management Transparency Act, revenue sharing and Customs modernization. After we have done this, and I’ve said this long ago, if most of us pay the right taxes, we really can start thinking about lowering rates," Henares said in an interview over ANC.
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