Espiritu bats for low gross income tax

Former Finance Secretary Edgardo B. Espiritu is espousing a gross income tax that would be subject to a low tax rate of between five and nine percent.

However, Espiritu’s gross income tax would apply to everybody, without exemptions.

Entities such as foundations, civic organizations, non-stock and non-profit organizations, non-governmental organizations, all government-owned and controlled corporations (GOCCS), would be covered by the gross income tax rule as long as they earn income.

Likewise, even overseas contract workers (OCWs) and others in similar situations would be taxed on their income, but at the lowest rate of the range or five percent so that the tax will not be onerous.

Espiritu said that the tax should be applied as uniformly as possible and all tax incentives, preferences and subsidies pertaining to income taxes should be removed.

The new system, he pointed out should do away with personal exemptions and deductions of any kind for these are the areas of discretion on the part of taxpayers and tax collectors that breed corruption.

Espiritu assured that the proposed change in taxation would be undertaken without violating any provision of the Constitution.

Likewise, he said, all provisions of the present Tax Code on withholding taxes and on final taxes on passive and other income would remain in force.

With respect to implementation, Espiritu said, utmost simplicity is suggested.

Marketmasters, withholding agents, finance officers, and anyone in charge of paying out income, Espiritu said, should deduct the tax of five to nine percent before any payment is made to the income recipients.

Espiritu said that a penalty should be imposed for any violation of the new tax.

Under the proposed system, salaried employees need not file income tax returns, thus, substantially reducing Bureau crafting paperwork and freeing manpower resources and facilities at the Bureau of Internal Revenue.