The Department of Finance (DOF) reiterated earlier appeals to Congress to approve this year the measure restructuring the country’s income tax system.
Finance Secretary Margarito Teves has asked lawmakers during a recent hearing of the House Ways and Means committee to support the bill reinstituting the simplified net income tax system or SNITs.
“We’re hoping to have this approved this year. It could generate at least P6 billion in revenues,” Teves said.
The proposed measure would relieve minimum-wage earners from the burden of paying income. Besides minimum-wage earners, the proposed measure would also provide tax relief to low-income government employees such as drivers, messengers, clerks and utility workers. It also increases exemptions to ease the tax burden on low- and middle-income earners. In exchange, however, higher earning individuals will be made to pay more tax.
Although exempting minimum-wage earners from paying taxes would result to foregone revenues, the DOF said this would cost only P500 million a year.
As part of the measure, the DOF is also supporting an initiative to restructure the income taxation of self-employed individuals and professionals to address tax avoidance through excessive deduction of business expenses.
The government is stepping-up measures to raise more revenues and effectively contain the budget deficit at P63 billion this year.
The government hopes to balance the budget by 2008 or two years ahead of the 2010 target.
Teves said approval of the SNITs measure would help ensure the government of balancing the budget by 2008.
He said the National Government is not relying on asset sales alone to boost revenues. He said the passage of revenue enhancement measures such as the SNITs bill and the bill rationalizing fiscal incentives would be a big help to government in its efforts to wipe out the budget deficit.
The proposed fiscal incentive bill aims to rationalize the tax perks given to local and foreign investors to help boost state coffers. Officials believe that giving companies too much tax perks has resulted to revenue losses for the government due to double registration of projects and redundant incentives.