Lowering income tax rate not possible in 16th Congress – Belmonte
SPEAKER Feliciano Belmonte Jr. ruled out the chances of the income tax reform bill being passed under the 16th Congress.
In a press conference on Thursday, Belmonte added that the issue over income tax should not be an election debate, in reaction to the opposition of Mar Roxas, the Liberal Party standard-bearer, to lowering the income tax rate.
“I don’t think so. How many days na lang tayo,” Belmonte said when asked if it would be possible to pass the controversial measure this Congress.
He said the proposal can be approved in the next administration so that it can be scrutinized further.
The Speaker said he does not want to pass a bill at a time it would only be used to attract the support of voters who would benefit from the tax cuts.
“I don’t like it to be linked to the elections and to votes. Let’s not be doing this because it is election year. Let’s not be doing this because it is pogi points. It’s something that deserves an in depth study toward making it equitable for the common man, particularly the middle class,” Belmonte said.
President Aquino has initially opposed lowering income tax rate, saying it might dampen the country’s credit ratings standing and raise value-added tax to make up for the lost revenue.
Aquino later softened his position, and asked the Finance Department to study the proposal.
Roxas, for his part, opposed the measure, saying some projects may suffer because of lower revenue generation. Meanwhile, all the other presidential candidates – Vice President Jejomar Binay and Sen. Grace Poe – have backed the proposal.
The current tax code sets a 32-percent rate for individuals with an annual taxable income of more than P500,000.
Marikina Rep. Miro Quimbo, ways and means chair, said his version, 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.
His bill also reduces the corporate income tax (CIT) rate from 30 percent to 25 percent and increases the minimum corporate income tax (MCIT) rate from two percent to five percent.
Quimbo said the levels of taxable income brackets and the corresponding base amount of tax for compensation of income earners will be adjusted based on Consumer Price Index (CPI).
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.
Meanwhile, Bayan Muna Rep. Neri Colmenares and Carlos Zarate filed a similar bill, House Bill 5401, which seeks to exempt low income families earning P396,000 from paying taxes.
Their bill also seeks to simplify further the income tax bracket by adjusting the highest tax base from P500,000 to P2,700,000 to reflect adjustments in the Consumer Price Index.
It also seeks an automatic adjustment or indexation mechanism every three years.
The legislature is eyeing 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.
In pushing for income tax reform, 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.
He said 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, Quimbo added.
