Too early to tinker with tax system
It is “too early” to make changes in the existing tax system on personal income, Finance Secretary Benjamin Diokno said yesterday amid proposals by lawmakers to reduce the income tax rates of Filipino working class families.
Diokno was reacting to a House bill filed by ACT Teachers party-list that targets to address imbalances in the Tax Reform for Acceleration and Inclusion (TRAIN) Law and the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).
“We just amended both PIT (personal income tax) and CIT (corporate income tax). Let’s give the new tax system a chance to operate,” Diokno told reporters. “It is too early to tinker with it.”
ACT Teachers Rep. France Castro recently filed the Tax Reform Act for the Masses and the Middle Class (TRAMM), which calls for a tax reform package that aims to reduce the income tax rates of Filipino working class families.
As part of the TRAIN Law, the government reduced the personal income tax for 99 percent of taxpayers, a much-needed relief after 20 years of non-adjustment.
Through TRAIN, the government has effectively given out a 14th-month pay every year to wage earners.
CREATE, on the other hand, lowered the CIT rate for all enterprises.
The proposed bill includes setting a 20 percent maximum personal income tax rate for individual citizens, and the exemption of the first P400,000 of their income.
It also plans to bring back additional exemptions for dependents. This time, senior citizens and persons with disabilities may be claimed as dependents.
The bill also seeks to raise the cap for tax-free bonuses to P150,000 and the mandate for the Bureau of Internal Revenue to set up a progressive, 10-bracket personal income tax schedule.
“Reducing income tax rates for working families will not only improve their way of life, but also strengthen their purchasing power, which will boost overall domestic demand for consumer goods,” Castro said.
“Our country remains among the most unequal in the world, with income shares of the poorest and richest segments of the population almost stagnant for decades now, and personal income tax rates for the poor and middle-class citizens in the Philippines are even higher than rates in other countries such as Singapore,” she said.