Senators support proposal to tax exempt P250K workers’ annual income

Sen. Ralph Recto. INQUIRER FILE PHOTO/GRIG C. MONTEGRANDE

Senate President Pro Tempore Ralph Recto’s proposal to exempt individuals earning P250,000 and below a year from tax effective January 1, 2018 got a nod from his colleagues on Wednesday.

At the continuation of plenary deliberations in the Senate on the proposed tax reform measure, Senator Sonny Angara, chairman of the Senate committee on ways and means, proposed that the tax exemption for those earning P250,000 and below be given in three years.

In the first year of implementation on January 1, 2018, only those earning P150,000 will be covered by the tax exemption and those earning P200,000 and P250,000 a year would only be exempted from tax in 2019 and 2020, respectively.

But instead of the proposed three-year schedule, Recto asked to amend Angara’s proposal by imposing the tax exemption starting next year for all individuals earning P250,000 and below.

“My problem is not only is a tax exempt lower in the first year but it will be hard to have an income tax schedule changing every year. It becomes complicated. And precisely, the amendments we are proposing are to simplify the tax code, not to make it complicated so that the ordinary Juan Dela Cruz understands the tax code. Now kung every year pabago-bago tayo ng rates (Now, if every year we change the rates), it becomes complicated…” he said.

“As I mentioned earlier, I’d rather have a situation wherein the first P250,000 will be zero tax,” Recto said.

The tax exemption, he said, should take effect in January, 2018. Meanwhile, tax exemptions on individuals earning more than 250,000 will vary.

Those earning P250,000 but not over P400,000, for instance, would be imposed 20 percent of the excess over P250,000, Recto said.

Angara accepted Recto’s proposal but the Senate as a body has yet to vote on the tax measure.

In an interview during the break, Angara explained that the tax exemption would be available to anybody, who earns more than P250,000.

“Unlike before na minimum wage earners exempt pero kumita man lang sya ng P10,000 over the minimum wage, yung buong halaga nagiging taxable. Ito, yung P250,000 mo, hindi pwedeng galawin ng gobyerno yun…” he said. /jpv

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