Tax cut, Aquino’s likely best farewell gift to PH
A group of prominent economists and socio-political analysts backed legislative initiatives to lower personal individual taxes, adjust tax brackets and align corporate taxes with the rest of the Association of Southeast Asian Nations (Asean).
In a statement issued Friday, the Foundation for Economic Freedom (FEF) said it was supporting government moves to look into compensatory revenue-raising measures that would be “progressive and simple to administer.”
“Inflation has pushed up the majority of fixed income earners to the highest tax brackets. The country has the highest individual tax and corporate tax rates in the region, thus, in the interest of fairness, equity, and competitiveness, new tax rates need to be legislated,” FEF said.
The Philippines has the second highest individual income tax rate in the region at 32 percent, next to Thailand’s and Vietnam’s 35 percent, and the highest value added tax (VAT) at 12 percent. The tax brackets remained unchanged since 1997.
Senator Sonny Angara, the author of the bill compressing the net taxable income brackets and lowering tax rates, especially for low- and middle-income earners, said this reform could be President Aquino’s best farewell gift to the nation.
Angara said lowering tax rates in the country would be good for the economy. “It is always better to plow money back in circulation, where it can stimulate the production and consumption of goods. Sometimes, instead of government doing the spending for the people, let the people do the spending themselves,” he said.
Once enacted into law, he said such reforms would retain more money in paychecks of salaried workers and lead to greater voluntary compliance. “It will also attract human capital and prevent the migration of our own to countries that do not reward industry and productivity with high tax rates,” he said.
FEF is chaired by former Finance Secretary Roberto de Ocampo while the vice chair is economist Romeo Bernardo, a former Finance Undersecretary. The president is Calixto Chikiamco. The group’s board of trustees is composed of Anthony Abad, Art Corpuz, Eduardo Gana, Felipe Medalla, Vaugn Montes, Simon Paterno and Gloria Tan-Climaco.
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