‘Pared-down’ tax reform bill eyed
PROPONENTS of the tax reform bill in Congress are now talking of a “pared-down” version of the measure that would make it palatable to President Aquino and his finance officials and ensure its passage before the country is swamped by election fever.
Sen. Sonny Angara, the main proponent of the measure in the Senate, and his House counterpart, Marikina Rep. Miro Quimbo, have presented a pared-down version of tax reform to Speaker Feliciano Belmonte and Senate President Franklin Drilon, who will in turn pitch it to Mr. Aquino.
The President has shown resistance to the measure out of concern over lost government revenues and fears of a downgrade in the country’s credit rating.
“With their [Drilon and Belmonte] backing, perhaps there is a last chance for the bill before the elections next year,” said Angara.
The simplified version of the bill would just adjust the current tax brackets for inflation, instead of proposing lower income tax rates, but it is still expected to benefit a lot of workers, he said.
Individual income tax brackets have not been amended since 1997 even when the consumer price index has doubled. This has resulted in a “bracket creep,” where taxpayers who are not high earners are pushed into higher tax brackets. Thus, ordinary workers could soon find themselves being taxed at the same rate as millionaires and billionaires.
Angara earlier said Congress would be willing to adjust the pending income tax reform bill to make it more acceptable to finance officials.
He also said lawmakers have been trying to convince the administration’s revenue officials that there would be sources of additional revenue should income tax reform take place.
For instance, the 2016 budget has a P50-billion allocation for the next round of increases of salaries of government employees under the salary standardization law. From these increases, the government stands to collect an additional P10 billion to P12 billion from income tax and value added tax, he said.
Quimbo said there are other ways to offset the projected losses in government revenue in the eight phases of the income tax reform being proposed.
One of these is to improve compliance of professionals and entrepreneurs in paying taxes under a progressive, rationalized and simpler system than the current one.
He noted that if professionals and entrepreneurs, whose compliance stood at 30 to 35 percent, improved to a 72 percent compliance (salary wage work workers are at 100 percent), then an additional P92 billion in revenues could be easily collected under the second phase of the tax reforms, Quimbo said.
“We want more taxpayers so we can lower the tax rates for everyone, especially those who pay honestly, or the salary earners,” Quimbo said.
Sen. Alan Peter Cayetano, the majority leader, said that even with the election season heating up, there is enough time for the Senate to tackle the income tax reform bill.
Any tax measure would first have to be passed by the House before the Senate can vote on it, as provided for in the Constitution.
Cayetano said that if there is a genuine desire to pass the tax reform measure, it will be approved.
“We do have time for desired reforms,” Cayetano told the Kamuning Bakery forum. With DJ Yap and Ben O. de Vera
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