Press Release
May 20, 2016


Senator Sonny Angara has welcomed the plans of the incoming Duterte government to overhaul the income tax system, and has reiterated his vow to continue pushing for income tax reform in the 17th Congress.

"We very much welcome presumptive president Rodrigo Duterte's plans of improving the country's income tax system to make it more progressive and equitable. We've been pushing for this reform since I was elected senator in 2013," said Angara, chairman of the ways and means committee.

Angara's initial proposal, Senate Bill 2149 which was filed in February 2014, aims to lower income tax rates across-the-board, reducing the highest tax rate from 32 to 25 percent, and to compress the tax brackets from seven to five.

Subsequently, in November of last year, he filed SB 3003 that seeks to adjust the levels of taxable income to take into account inflation.

The senator said that given the remaining time of the Aquino administration, SB 3003 was a more viable proposal and should be the minimum position the government can take in reforming the country's tax system.

Under the National Internal Revenue Code of 1997, individuals with taxable income of over P500,000 are taxed with a fixed amount of P125,000 plus the 32 percent of the excess over P500,000.

At present, the Philippines has the second highest individual income tax rate at 32 percent in the ASEAN region, next to Thailand and Vietnam's 35 percent.

"P500,000 in 1997 does not have the same value today due to inflation. P1 in 1997, when adjusted for inflation, is now worth only 44 centavos. Our workers are being excessively taxed. And worse, despite an increase in their salaries, some of our workers will make less money in real terms than in 1997 because of inflation and as a result of being in a higher tax bracket," the lawmaker explained.

"We'll definitely support incoming president Duterte's plan to immediately revisit the decades-old individual income tax scheme within the first 180 days of his administration," he added.

President Aquino and his economic managers did not support proposals to lower income tax rates citing possible P30-billion revenue loss whereas Angara pointed out that tax reform could have already been done earlier given the hundreds of billions of government underspending.

The proposed measure also did not pass the House of Representatives which prevented the Senate from making progress as the Constitution's origination clause provides that all revenue measures must originate from the Lower House.

"Economists and experts have all agreed that there is an urgent need to change the country's current tax system given how outdated, unfair and uncompetitive it is. This long overdue reform is a perfect example of Duterte's brand of 'change is coming,'" Angara said.

"Kung gusto natin ng pagbabago, suportahan natin ang pagpasa ng panukalang batas na ito na ang layunin ay iangat ang antas ng pamumuhay ng bawat pamilyang Pilipino sa halip na payamanin ang gobyerno," the senator stressed.

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