MANILA, Philippines - The country’s top business groups and professional organizations yesterday renewed calls for the government to slash what they said is Southeast Asia’s highest income tax rates in a boost to tax reform moves in Congress despite Malacañang’s opposition.
“The broad-based coalition of employees, employers, trade groups, chambers of commerce and professional organizations hereby voice our support for various income tax reform measures pending in Congress,” the groups said in a statement.
“(This is) to restore fairness in the Philippine tax system and make it competitive with our Asean (Association of Southeast Asian Nations) neighbors,” they added.
The 18 groups that signed the so-called “unity statement” were the Philippine Chamber of Commerce and Industry, the Makati Business Club, Management Association of the Philippines, together with the chambers of commerce of Europe, Japan, South Korea, Canada, Australia and New Zealand, as well as the US. The Federation of Filipino-Chinese Chambers of Commerce and Industry also supported the move.
Also signatories were the Tax Management Association of the Philippines, Pilipino Banana Growers and Exporters Association, Alliance of Workers in the Informal Economy/Sector, Foundation for Economic Freedom, Philippine Association of Multinational Companies Regional Headquarters, Center for Strategic Reform, the Financial Executives of the Philippines and the Confederation for Unity, Recognition and Advancement of Government Employees.
The groups called on both Houses of Congress to “immediately” pass pending measures that would lower income taxes, something the Aquino administration has opposed, saying it will lead to more than P30 billion in forgone revenues.
Twin bills in both the House of Representatives and Senate reforming income levies are pending before the committee level.
Specifically, they batted for adjustment and re-structuring of income tax brackets for individuals, who currently pay up to 32 percent of their income to the government. Lower corporate income taxes, now going as high as 30 percent, was also appealed.
Finally, the groups also said income taxes should be indexed to the rise in prices of basic goods and commodities every three years so that it is ensured that taxes will only rise once salaries increase as well.
“Inflation has pushed up nominal wages and salaries into higher tax brackets causing increases in income taxes, but no increase in purchasing power,” the groups explained.
“Effectively, the government has been unjustly relying on inflation to collect more taxes from salaried workers, who bear the bulk of the tax burden among individual taxpayers, rather than through efficient tax administration,” they said.
Under the National Internal Revenue Code, annual income of more than P500,000 is taxed by the maximum rate of 32 percent. The group said this is high when compared with some other Asean countries.