SPEAKER Pantaleon Alvarez has vowed to hasten the passage of a law lowering personal and corporate income taxes, saying the bill will be passed before the year ends.
“We will do everything we can to pass it within a year,” Alvarez said, explaining the tax cuts would be a huge relief to the people, especially the middle class.
The Davao del Norte congressman said the House leadership is committed to passing the measure at the soonest possible time after President Rodrigo Duterte asked Congress during his State of the Nation Address for lower personal and corporate income tax rates.
Alvarez said that simplifying income tax brackets would address corruption in the Bureau of Internal Revenue as this would pave the way for standard income tax rates that is away from manipulation by unscrupulous officials.
Under the current tax system, Alvarez said unscrupulous BIR officials could always find their way to “squeeze” taxpayers as the present taxation system is “complicated.”
“Right now, our law on taxation is very complicated and only those in the BIR understand it completely so some of them could extort from taxpayers,” Alvarez said.
“What they do is they’ll deliberately make tax assessments that are too exorbitant. For example, they’ll assess for P100 million only to ask you to pay P20 million. From that amount, however, only P10 million will be covered by receipts, sometimes only P5 million. That’s what happens,” he said.
Tax Management Association of the Philippines president Benedict Tugonon lauded the Duterte’s administration’s move, saying that a tax reform program was long overdue.
“We are very pleased to hear the statement of the President and this is what taxpayers have been waiting for a very long time—a mandate from the President to Congress to push tax reform, particularly towards the simpler and more equitable,” Tugonon said.
Tugonon noted, however, that the lowering of the income tax rates will also result in lower revenue collections for the government.
The current income tax brackets were set in 1997 under the National Internal Revenue Code, and are among the highest in Southeast Asia.
A Filipino employee earning a little over P500,000 is taxed 32 percent while his Thai counterpart earning the equivalent income is only taxed 10 percent.
On the other hand, Tugonon said the TMAP’s position is that the current 32-percent corporate income tax can be cut to 25 percent to be at par with other countries in the region.
At the same time, Tugonon said, a relaxation of bank secrecy laws would lead taxpayers to adopt “a more compliant attitude” toward paying taxes.
“TMAP has always advocated that an adjustment in the tax brackets is long overdue and Congress must adjust them immediately,” he said.