Albay Rep. Joey Salceda on Sunday cited lower income tax shall greet ordinary employees in 2023 due to the Tax Reform for Acceleration and Inclusion Law or Republic Act No. 10963.
“A 13.5th month bonus” is how he described the cuts to the personal income tax rates in 2023.
The TRAIN Law was principally authored and sponsored by Salceda, House ways and means chairperson.
“The TRAIN Law personal income tax (PIT) cut will be equivalent to around 5% in gross income in added take home pay. That’s around half a month’s worth of additional disposable income,” he said.
The new annual income tax rates would reduce taxes by around 5% for those earning between over P250,000 and P2 million.
Individuals with taxable income above P2 million but not greater than P8 million would see a 2% decrease in personal income tax.
Income below P250,000 will still be exempt from PIT.
It shall increase disposable income for Filipino families by around P32 billion by our emerging estimates. That will boost consumer spending and also leave some room for savings for homeownership,” Salceda cited.
The cut would also cushion workers from the impact of the 1 percentage point increase in Social Security System contributions and the 0.5 percentage point increase in Philhealth premiums.
“Take home is still up 3.5 percentage points more or less,” Salceda said.
Meanwhile, he called for the implementation of the United States of America-Philippines tax treaty to lower taxes for Youtubers, freelancers with US employer.
He said these freelancers could benefit from the reduced personal income tax rates under the TRAIN Law if the US-Philippine Income Tax
Convention could be implemented with an automatic exchange of information mechanism.
“The TRAIN Law will massively benefit US-employed Pinoyfreelancers, if the rates can be implemented,” he stressed.
“From 30%, their taxes go down to around 15% if the Philippines’reduced rates are imposed on them instead. That’s a two-month bonus,”.
He urged the Senate needs to ratify the Multilateral Conventionon Mutual Administrative Assistance in Tax Matters so that the taxauthorities of the US and the Philippines could implement the taxtreaty better, allowing both countries to impose the proper rates ontheir nationals.
“I hope the Senate realizes this, and finally ratifies the convention on the 9th year since we signed it,” he said.