Taxpayers to get relief

Four of every five individual taxpayers will pay almost half their current income tax or none at all in two to three years, if Congress green-lights the proposed tax policy reform program, the Department of Finance (DOF) said on Wednesday.

Citing 2013 Bureau of Internal Revenue data, the DOF said almost 4.7 million taxpayers earn P250,000 or less a year, an income bracket that the program’s first package will exempt from paying personal income tax when implemented by 2018.

Over 500,000 taxpayers who earn P250,000-P400,000 annually, meanwhile, will pay only 20 percent of their annual gross incomes in excess of P250,000.

This is lower than the current maximum rate of 32 percent, the DOF added.

These two proposed personal income tax brackets represent about 80 percent of the BIR’s tax base for individual taxpayers in 2013, according to the DOF.

Under the DOF’s proposal, the personal income tax system will have six brackets, in which those who earn P250,000 and below per year will not pay income tax starting 2018.

The second bracket for those earning P250,000-P400,000 annually will be slapped a lower rate of 15 percent by 2019.

The third bracket covering those who earn P400,000-P800,000 a year will pay P30,000 plus 25 percent in excess of P400,000.

In 2019, taxpayers in the third bracket will pay a lower P22,500 plus 20 percent in excess of P400,000.

The fourth bracket that cover those earning P800,000-P2 million annually will pay P130,000 plus 30 percent in excess of P800,000.

By 2019, those in the fourth bracket will pay P102,500 plus 25 percent in excess of P800,000.

The fifth bracket covering taxpayers who earn P2-5 million per year will be slapped a tax of P490,000 plus 32 percent in excess of P2 million.