Press Release
June 21, 2016

Lower taxes, higher take-home pay for Pinoy workers

Senator Sonny Angara is optimistic that his proposed income tax reform will finally be signed into law under the incoming administration as the economic managers of President-elect Rodrigo Duterte have put tax reform among the top of his 10-point socioeconomic agenda.

At the first day of "Sulong Pilipinas: Hakbang Tungo sa Kaunlaran," a consultative workshop to seek recommendation as regards Duterte's 10-point economic agenda, incoming Finance Secretary Carlos Dominguez told business leaders that "the new administration will definitely review the tax system, initially to update the income tax brackets and eventually to lowering corporate and individual tax rates."

"We're happy that the sentiments of our workers, who feel that they are being excessively taxed, are now being heard. We've been pushing for income tax reform since we were elected in 2013 when we saw how outdated, unfair and oppressive our current system of taxation is," said Angara, chairman of the ways and means committee and the Senate's leading voice in pushing for income tax reform.

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.

Second on the incoming administration's 10-point economic agenda is to "institute progressive tax reform and more effective tax collection, indexing taxes to inflation."

It also states that a tax reform package will be submitted to Congress by September.

"Economists and experts have all agreed that there is an urgent need to change the country's current tax system. I'm looking forward to the tax reform package that will be submitted to us. We'll make sure that the Congress passes a version that will ease the tax burden of our workers and at the same time, would not pose risk to the country's fiscal health but would help improve revenue collection, attract foreign direct investment and boost job generation in the country," said the senator, who also attended "Sulong Pilipinas" held in Davao City.

Dominguez added that "corporate taxes will be adjusted to be competitive with the rest of the region to make our economy more competitive for investments."

Angara has also filed a bill reducing corporate income tax rate, noting that with a 30-percent corporate income tax rate, which is the highest among ASEAN countries, the Philippines might be left behind in the tight race for job-creating investments.

Angara cited a recent study by Dr. Stella Quimbo of the UP School of Economics which showed that while a decrease in corporate income tax rate will initially lead to lower corporate income tax collection, the offset will come in the form of greater net collections given the projected increase in investments when corporate income tax rates are reduced.

Dominguez also said that they would review the long list of VAT-exemptions to compensate for expected revenue loss from lower taxes.

The lawmaker agreed that the Congress could study and identify the transactions that should no longer be exempted from VAT.

He, however, asked the income finance department not to touch VAT exemptions enjoyed by senior citizens and persons with disabilities, which Angara has sponsored.

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