IF the current administration continues to ignore the tax reforms being pushed by lawmakers, traders and workers, the next set of leaders will take up the cause to ease the tax burden on Filipinos, presidential candidate and Senator Grace Poe said Saturday.
Poe, an independent presidential candidate and the frontrunner in presidential preference surveys, said lowering income taxes would be among her priorities in office, should she win in 2016.
“I stand on a vision of genuine inclusive growth, and this is one of the most significant reforms a government can undertake to show its compassion for the millions of wage and salary workers who lose up to a third of their hard-earned income to unreasonably high taxes,” she said.
Under the Philippines’ current income tax bracket system, a Teacher 1 who makes roughly P18,000 per month pays over P14,000 in annual taxes if she is single and has no dependents.
“Almost a whole month’s pay goes to taxes. We should realize how big a thing it is for us to return that money to our countrymen through the lowering of taxes,” she said.
According to the Bureau of Internal Revenue, 85 percent of the total taxes on compensation and business come from wage and salary workers, who comprise more than half of the country’s labor force.
The increase in the annual take-home pay of a Teacher 1 due to lower taxes can buy more food for the family or provide an elderly with medicines or even serve as allowance for kids in school, Poe noted.
Since 1997, when the Tax Reform Act was passed, tax brackets in the Philippines have not changed. Salaries, however, have been adjusted to inflation, pushing more wage and salary workers into higher brackets, which compel them to pay higher taxes.
The 32-percent individual income tax rate in the Philippines for income over P500,000 is among the highest tax rates in Asia.
“It is time to implement the re-bracketing [of taxable income] that our countrymen are asking for after almost two decades,” said Poe.
“After all, we can see the effect of this on the spending power of Filipinos. Almost nothing is left after deductions for taxes, insurance and other contributions,” she said.