MANILA-- A lawmaker at the House of Representatives on Sunday said the proposed lowering of personal income tax rates could give a 20-percent boost in the purchasing power of at least nine out of 10 Filipino individual taxpayers.
In a statement, Buhay Rep. Lito Atienza cited projections made by online stockbroker COL Financial Group Inc. that the personal income tax cuts will lead to a 20-percent increase in disposable income for 93 percent of taxpayers.
Calculations made by independent entities such as COL Financial tend to be more reliable compared to estimates from other sources, including official sources, Atienza said.
On May 31, the lower chamber approved House Bill 5636, otherwise known as the Tax Reform for Acceleration and Inclusion (TRAIN) with 246 votes in the affirmative, 9 negative and one abstention.
The bill was transmitted to the Senate for its own deliberations. All tax measures must emanate from the House of Representatives under the Constitution.
The tax reductions are bound to rev up consumption spending by middle class families, which may well help counteract possible delays in new business activities due to the recent declaration of martial law in Mindanao and the Battle of Marawi, Atienza said.
Under the tax reform bill, workers earning no more than PHP250,000 annually will be exempted from paying personal income taxes.
Meanwhile, those earning over PHP250,000-400,000 annually will have a 20 percent tax rate in excess of PHP250,000; those earning over PHP400,000-800,000 will pay PHP30,000 plus 25 percent of the excess over PHP400,000; while those grossing over PHP800,000-2 million shall be taxed PHP130,000 plus 30 percent in excess of PHP800,000.
Furthermore, those bringing in over PHP2 million-5 million shall be taxed PHP490,000 plus 32 percent of the excess over PHP2 million, while the so-called ultra rich, or those earning over PHP5 million, shall be taxed PHP1.45 million plus 35 percent of the excess over PHP5 million.
There is also an increase in the tax exemption for the 13th month pay and other benefits from PHP82,000 to PHP100,000.
The 8 percent tax on the self-employed and professionals will now only be imposed on gross receipts in excess of PHP250,000.
To compensate for the revenue losses from the lowering of the PIT rates, some of the offsetting measures include increasing excise tax rates on all petroleum products and automobiles; expanding the value added tax (VAT) base; introducing excise tax on sugar-sweetened beverages; and improving tax administration measures.
The bill seeks to impose the following excise tax rates on diesel fuel oil, liquefied petroleum gas, and bunker fuel oil: PHP3 per liter in 2018; PHP5 in 2019, and PHP6 in 2020.
The bill would also increase the existing excise taxes on lubricating oils and greases, waxes, denatured alcohol for motive power, leaded premium gasoline, unleaded premium gasoline, and aviation turbo jet fuel to PHP7 per liter in 2018, PHP9 in 2019, and PHP10 in 2020.
As for the excise tax on automobiles, the measure proposes a staggered implementation of increased levies in two schedules in 2018 and 2019.
The excise tax for cars will be raised to 3 percent by 2018 and further increased to 4 percent by 2019 if the net manufacturer's price/importer's selling price is up to PHP600,000 for the lower bracket.
For the higher bracket with a price of over PHP3.1 million, the tax rate by 2018 will be PHP1.468 million plus 90 percent of the value in excess of PHP3.1 million. For 2019, if the price is over PHP3.1 million, the tax rate will be PHP1.824 million plus 120 percent of the value in excess of PHP3.1 million.
Meanwhile, sugar-sweetened beverages shall be slapped with an excise tax of PHP10-per liter of volume capacity by 2018.
The bill will also lift the VAT exemption on lease of residential units with monthly rental not exceeding PHP10,000.
Source: Philippines News Agency