Palace willing to lower individual, corporate taxes

MANILA, Philippines - Malacañang yesterday expressed willingness to lower the rates of income taxes – both for workers and corporate entities – echoing the line of Bureau of Internal Revenue (BIR) commissioner Kim Henares for a thorough study on such proposals.

Press Secretary Herminio Coloma Jr. admitted the need for consultation and consensus from the people and the stakeholders.

Even before winning the May 2010 elections, President Aquino repeatedly said he has no plans of increasing or imposing additional taxes, insisting his government will work hard to improve tax collection and plug tax leakages.

Fixed income earners comprise the bulk, around 85 percent, of the government’s tax base, while the balance is collected from the “self-employed” – businessmen, professionals like doctors, accountants and lawyers who are perceived to have been paying minuscule taxes.

Businessmen have been known to pass on to consumers the taxes due them.

Coloma said a study would give the government an opportunity on what programs would best serve the interests of the majority of the nearly 100-million Filipino population.

He highlighted a consultation with the broadest sectors possible to arrive at a reasonable decision.

The proposal to reduce personal income tax came from Sen. Sonny Angara who suggested the current 32 percent should be cut to 25 percent, in step with the Philippines’ commitment to the ASEAN Economic Blueprint.

There will be ASEAN Integration on December 2015. Of the 10-member Association of Southeast Asian Nations countries, only three – the Philippines, Thailand and Vietnam – have the highest rates of individual income tax.

Manila is third highest, next to Vietnam (35 percent) and Bangkok (37 percent).

The highest tax bracket of other ASEAN countries like Cambodia is 20 percent; Indonesia, 30 percent; Laos, 24 percent; Malaysia, 26 percent; Myanmar, 20 percent and Singapore, 20 percent.

Angara, a former congressman from Aurora, pointed out the country’s current individual income tax bracket has remained unchanged since 1997, even when the consumer price index has almost doubled.

Isabela Rep. Giorgiddi Aggabao, for his part, called on the BIR to “also look at lowering corporate income tax” – currently pegged at 30 percent – “conditioned that the resulting tax savings will be plowed back exclusively for expansion.”