House to overhaul income tax laws

MANILA, Philippines - The House committee on ways and means is working on a consolidated version of bills seeking to reduce corporate and income taxes that proponents say would boost the economy and increase government revenues.

Marikina City Rep. Romero Quimbo, chairman of the committee, said there are six measures, including one dealing with tax exemptions on employees’ 13th month pay, that lawmakers are working to consolidate in the coming weeks even as they await inputs from the Bureau of Internal Revenue (BIR), the Department of Finance and the Department of Trade and Industry.

“We want an income tax law that is simple, meaning easy to comply with and enforce, not prone to corruption and that would give more purchasing money in the hands of taxpayers, and more funds for investments and credit so that our growth will be truly inclusive,” Quimbo told The STAR.

“Our present income tax law is almost 20 years old. The economy has changed, the cost of living has changed, just as the business environment has changed. Even the technology is so much different now, so we must update and improve our income tax rates,” he added.

He said the committee is awaiting the input of BIR Commission Kim Henares, who earlier expressed opposition to reducing income taxes of individuals and corporations.

“We (Congress) have absolute discretion and exclusive jurisdiction under the Constitution to craft tax laws, but of course we will definitely listen to the recommendations of the BIR and other agencies that need to be consulted,” he said.

He also warned that Congress must pass an updated and reformed income tax law this year or before the election fever sets in in 2015.

House Deputy Majority Leader and Valenzuela City Rep. Magtanggol Gunigundo, Reps. Rodrigo Abellanosa (Cebu City), Salvacion Ponce Enrile (Cagayan) and Quimbo were among those who filed bills to reduce individual and corporate income taxes in varying percentages.

Gunigundo proposed to exempt workers’ earning up to P180,000 a year from taxation. He said these additional tax-exempt individuals would include government personnel with Salary Grade 8 and others state workers whose pay level is P15,000.

He said the reduction of income tax would result in revenue loss for the government of about P90 billion, but the move will provide individual taxpayers more disposable income, which they can either save or spend in getting services or purchasing goods that would be subjected to 12 percent value added tax anyway.

“Saving or spending the additional income, either way, the velocity of money in the economy will be good for the nation. Besides, the tax collections are supposed to be for the taxpayers, so the revenue loss is not as big as the Bureau of Internal Revenue portrays it to be,” Gunigundo said.

He said the increased savings and spending would lead to greater demand for services and goods, better credit opportunities and employment as businesses hire more workers to increase production.