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Angara Supports Duterte’s Estate Tax Reform Proposal
Angara said the estate tax rates will be reduced and the tax deductible expenses – such as medical expenses incurred by the deceased – will be increased.
“The end result is that a grieving family will be spared the further anguish of paying high estate taxes which often delay the distribution of the assets to the heirs, ” the senator said, as he expressed his full support to a similar proposal recently announced by Finance Sec. Carlos “Sonny” Dominguez.
“This tax hurdle, plus unfamiliarity with estate taxes and cultural avoidance to discuss death-related affairs , has led families to delay settling the estate, resulting in huge penalties and surcharges while use of assets are not maximized,” the lawmaker said.
In revamping the estate tax regime, Angara assured that his committee will be adopting an “una ang pamilya” philosophy, “by setting rules that are easy to comply with, and rates that are affordable.”
He explained that “present estate tax rates, like those for income taxes , were pegged in 1997, so it is time to adjust them because some exemptions are ridiculously low.”
Angara has filed Senate Bill 980 which incorporates the estate tax reforms he is advocating.
Foremost of these is adjusting the 1997-era estate rates to inflation which , he said, “would result in doubling the tax-exempt values.”
“So that it will not take us 20 years to readjust the rates,” Angara’s bill mandates a resetting of rates every three years, with inflation as basis.
Angara is also proposing that in computing the estate tax, the standard deduction be increased from P1 million to P2 million .
In addition, a family home will not be taxed if it is valued at P2 million, double the present threshold of P1 million.
Heirs can also charge to the estate medical expenses of up to P1 million and funeral expenses of up to P500,000, in recognition, he said , “of the high cost of dying the country.”
Angara’s bill also allows an authorized heir or estate administrator to withdraw P200,000 from the bank deposits of the deceased .
He said that by “lowering the compliance hurdle for what is essentially an inheritance tax, tax clearances, which are a requirement , for, let us say, a real property’s sale, will now be expedited resulting in the asset’s commercial exploitation.”
“It will be good for the heirs because they can now enjoy the assets, good for the government because collections will increase, and good for the economy because assets will be freed for development,” Angara said.
Official records show that only seven in every 100 deaths in the country settle estate taxes while payment of the latter accounts for 1/6th of 1 percent of total Bureau of Internal Revenue collections.
An estate tax is imposed on the transfer of the “decedent’s estate to his lawful heirs and beneficiaries based on the fair market value of the net estate at the time of the decedent’s death.
At present, a “net estate” amounting to P200,000 , which is the lowest in the estate tax brackets, is exempt from estate taxes.
The top-tier covers estate with a value of P10 million and over which has a tax due of P1,215,000 plus 20 percent of the amount in excess of P10 million.
