Angara Wants to See Proposal to Lower Tax Rates Mentioned in SONA

(PNA) – Senator Juan Edgardo Angara on Wednesday called on President Benigno Aquino III to make lowered personal income tax rates as his goodbye gift to the people by mentioning it in his last State of the Nation Address (SONA) on July 27.

“Of the thousands of words in his SONA, one of the most awaited and one which will be most applauded is the President saying that he will back bills that will lower individual income taxes, “ Angara said in a press statement.

Angara, chairman of the committee on ways and means, authored Senate Bill No. 2149 that aims to adjust and compress income tax brackets and reduce the maximum tax rate especially for low and middle income earners from 32 to 25 percent by 2017.

He is hoping that among the bills the President traditionally mention in the SONA for priority approval are those that will revamp tax brackets.

The senator noted the Philippines has the second highest individual income tax rate in the Southeast Asian region at 32 percent next into Thailand and Vietnam’s 35 percent and the highest value added tax at 12 percent.

He further noted that the country’s current individual income tax bracket has remained unchanged since 1997 until today even when the consumer price index has already almost doubled.

“We need to think ahead and be competitive in the region but more importantly, we must give the Filipino people a break,” Angara said.

Angara, who is celebrating his 43rd birthday, said that at present, a policeman and a teacher whose net tax income is Php150,000 are taxed at the third highest rate.

”This injustice is called ‘bracket creep’ where taxpayers who are not considered high earning are already pushed into high barrackers. At some point, economics say, this bracket creep would lead to ‘fiscal drag where people will not have any purchasing power left to contribute to the economy due to excessive taxation,” Angara said.

He said President Aquino’s mention of tax reforms in his SONA could mobilize support from the members of the House of Representatives.

”The Department of Finance has already expressed its openness to review and amend the tax rates and brackets and we welcome this progress,” Angara, a former congressman, said.

In making one final push for lower income taxes, Angara again calmed concerns by revenue officers that altering tax rates will push a big hole in the coffers.

“Any revenue loss is recoverable. If withholding tax is converted into disposable income, then it can be recouped through the VAT on goods. If part of the salary intended to be remitted to the BIR will not be spent for goods, then it can still be recaptured through the tax on the goods bought,” he explained.

“It will also be good for the economy. It is always better to plow money back in circulation, where it can stimulate the production and consumption of goods,” he added.

He said his proposal could also attract human capital and prevent the migration of the country’s labor force to countries which do not reward industry and productivity with high tax rates. (PNA) CTB/JFM