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Lowering the individual (personal) and corporate income tax rates is not easy nor is it simple. The government needs to find additional sources of revenues, assuming that government expenditures will remain at the same level, to offset the “lost” revenues from income tax.
The current rates of individual and corporate income tax in our country are the highest in the region. It is indeed time for the government to lessen the burden of employees and business organizations. We have no reason to doubt the sincerity of the Duterte Administration in addressing this issue.
The Department of Finance (DoF) has already submitted a proposed tax reform package to the Committee on Ways and Means of the House of Representatives as the 1987 Constitution provides that all tax, revenue and tariff measures should originate from the House of Representatives.
The proposal includes exempting from income tax payments those who earn an annual income of 250,000.00 or less and the lowering of income tax rates from the current 32 percent to a maximum of 25 percent, except for the so-called “ultra-rich” or those earning at least five million a year who will have to pay a 35 percent income tax.
The tax reform package includes increased excise tax rates for oil products and restructured excise tax rates for cars, which are both aimed at offsetting the “lost” government revenues from lower income tax.
While all these are good, the reform package provision on the reduction of VAT exemptions has already gained adverse reactions as the same pointed to senior citizens and persons with disabilities (PWDs) losing the VAT exemption of their purchases that has already been given to them through laws.
We hope that the House Ways and Means Committee will look into the “wisdom” of taking away from senior citizens and PWDs what was already given to them and weigh the same against other available options for additional government revenues.
We also hope that in pursuing this tax reform package, our legislators and other government leaders will focus on the effectiveness of our revenue collection agencies in collecting taxes. Perhaps, with better tax collection performance, the government no longer needs to take the already given and enjoyed benefits of our senior citizens and PWDs.
It is bad enough that taxpayers are carrying heavier burdens simply because of the less-than-desired collection performance of concerned government agencies. It is worse for our senior citizens and PWDs to be forced to sacrifice because of such kind of performance.