Bigger tax for high-income earners feasible, DOF says
May 16, 2016 | 4:51am
MANILA, Philippines — Taxing high-income earners more than their middle and poor counterparts is feasible, but the incoming Duterte government will need to be careful not to discourage them from investing.
"That's feasible and you can calibrate it in such a way that you will not incur revenue losses," Finance Undersecretary and chief economist Gil Beltran said in an interview.
Presumptive president Rodrigo Duterte bared that he intends to raise taxes for those earning high, and lower those for the rest. He did not give details, however, how he intends to execute this plan.
As it is, the current tax system is already "progressive" and simply reflects what Duterte wants to achieve, Bureau of Internal Revenue (BIR) Commissioner Kim Henares said.
The difference, she said, will be on how he plans to reform the tax rates and brackets similar to botched legislative proposals last year.
Under the National Internal Revenue Code, there are seven tax brackets with the lowest charged a rate of 10 percent, while the biggest — at more P500,000 annual income — taxed 32 percent.
Beltran said Duterte's plan could be similar to China's tax system, where the highest individual tax rate is pegged at 45 percent.
The country also has seven brackets, but unlike the Philippines where rates increase five percent every step, China has varying increases of five, seven and 10 percent.
"This is consistent with what is required in the Constitution which is a progressive tax rate. This is not discriminatory," Beltran said.
But he added that one problem he is seeing is the potential that the proposal could deter investments.
"These earners are those who have businesses here. The trend now is to lower tax rates so if they see that ours are higher, they could easily go out," Beltran said.
Henares agreed, adding even these high-earners can easily claim deductions which, in effect, lower their taxable income down the bracket.
"This is the reason why we want a comprehensive tax reform. Ideally, you reduce income taxes across-the-board and get additional revenues elsewhere," she said.
But industry group Tax Management Association of the Philippines had an opposite view.
"I don't think it will deter investments so long as your top rate is competitive with those of the rest in the region," said president Benedict Tugonon in a phone interview.
According to Department of Finance data, the Philippines' top individual tax rate of 32 percent is higher than those in Indonesia (30 percent), Malaysia (25 percent), Singapore (20 percent) and Hong Kong (15 percent).
On the flip side, it is lower than in Thailand and Vietnam (35 percent), Myanmar (50 percent), and China.
Income taxes accounted for 58.7 percent of total BIR collections last year, data showed. There is no information how much of these came from high-income earners.
BrandSpace Articles
<
>
Philstar
- Latest
- Trending
Trending
Latest
Trending
By Boo Chanco | 12 hours ago
By Wilson Sy | 12 hours ago
By Elijah Felice Rosales | 12 hours ago
By Richmond Mercurio | 12 hours ago
Latest
By Richmond Mercurio | 12 hours ago
By Louella Desiderio | 12 hours ago
By Jose Teodoro ‘TG’ Limcaoco | 12 hours ago
By Marianne Go | 12 hours ago
Recommended
18 hours ago
1 day ago
1 day ago
1 day ago
