House to pass bill lowering income tax rate before year end
THE House of Representatives will have to wait until late this year to pass the bill seeking to lower individual income tax rates in a bid to increase the ordinary worker’s take-home pay, a majority lawmaker said Tuesday.
Marikina Representative Romero “Miro” Quimbo, who chairs the House ways and means committee, said the rationalization of the personal income tax will be passed before December, from its original target date of June 11.
Meantime, the committee will have to focus on approving the passage of other revenue-generating measures such as bills raising excise tax on oil, the fiscal incentives rationalization bill and the proposed Tax Incentives Management Act (TIMTA).
“We will not pass the bill seeking to lower the individual income tax rates without approving first the TIMTA, fiscal incentives rationalization bill and excise tax on oil,” Quimbo said.
“(However), we will pass it in late 2015,” he added.
The technical working group is consolidating the 13 bills seeking to lower income tax.
Quimbo’s House Bill No. 4829 proposes a flat rate of 25 percent income tax on self-employed individuals and professionals, and a five percent minimum income tax rate on self-employed individuals and professionals, and reduces the corporate income tax rate to 25 percent from 35 percent, and increases minimum corporate income tax rate to five percent from two percent.
The bill also seeks a five percent income tax on individuals earning not over P20,000, and a 30 percent income tax on those earning over P500,000 but not over P1 million.
Currently, an individual earning P10,000 or less pays a five percent tax, while those earning more than P500,000 pays 32 percent tax.
The panel seeks to lower income tax rate just after President Benigno Aquino III signed the law increasing the tax exemption cap on bonuses to P82,000 from P30,000.
Quimbo said the levels of taxable income brackets and the corresponding base amount of tax for compensation income earners will be adjusted based on Consumer Price Index (CPI).
He added that at least 16 percent of total individual income earners pay for 85 percent of total individual income tax collection in 2013.
Meanwhile, 72 percent of all income taxes are paid by the middle class while the highest income earners shoulder a smaller portion of tax payments, he added.
Quimbo had warned of a “bracket creep” phenomenon wherein workers’ salaries increase according to inflation while tax brackets remain unadjusted since 1997, when the tax code was passed.
