The good news is that President Aquino is now open to the
idea of lowering income tax rates.
Malacañang had opposed any reduction in income tax rates,
consistent with the recommendation of the Department of Finance, which saw the
proposed measure as a bad move that
would substantially lower government revenues.
The new proposal involves, first of all, the indexation
of income taxes to inflation. This would bring tax rates at par with current
costs of living.
The second phase calls for both the actual lowering of
tax rates from the current structure which has the highest tax rate at 32
percent to simpler brackets like 5, 7.5, 15 and 30 percent at the highest and
the simplification of the tax system for businessmen, entrepreneurs and
professionals.
The other phases include aligning corporate income taxes
with the rest of the ASEAN, simplification of the deduction system, revision of
fiscal incentives, evaluation of the surcharge excise tax on fuel, and
adjustments on the value-added tax.
These proposals, if approved, would leave a P30 billion
hole in government revenues. Once the
entire program is completed, however, government would have P82 billion in
additional revenues.
The revised proposal looks good on paper. The reality is
that we have a regressive tax system that makes the poor cough up more money
than the rich, instead of the other way around. This has got to stop. Now let's
see if Malacañang is amenable to the proposed reform and leaves us with paying
lower income taxes before a new administration takes over next year.
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