PCCI backs first package of tax reform program
The Philippine Chamber of Commerce and Industry (PCCI) said it fully supports the first package of the comprehensive tax reform, which would lower personal income taxes while broadening the base for revenue generation.
In a statement, PCCI President George T. Barcelon said that the tax reform package, which was filed in Congress last January, would leave a positive impact on the economy.
The Tax Reform for Acceleration and Inclusion Act would amend the decades-old tax schedule for personal income, which is one of the highest within the Asean.
“Lowering personal income tax will increase disposable income, spurring savings and consumption, which leads to increased production,” Barcelon said in a statement.
“A virtuous cycle could ensue, where greater consumption and production could lead to a rise in tax collection,” he added.
This comes as PCCI is holding a roadshow in key locations across the country to raise a more comprehensive understanding of the tax reform program.
Barcelon said that inflation has graduated many low income earners into progressively higher tax bracket. He said that this therefore requires the tax brackets to be adjusted.
The bill, backed by the Department of Finance, readjusts the tax rates last put in place in 1997 to allow more take home pay for the largely middle class demographic while slapping higher rates for the ultra-rich.
For example, the first taxable bracket covers an individual earning P250,000 to P400,000 annually. Under the bill, the individual would pay for 20% of the value exceeding the P250,000 level. In comparison, the National Internal Revenue Code of 1997 would slap a P50,000 fee plus 30% of what goes beyond the same P250,000 mark.
Filed as House Bill No. 4774 by Rep. Dakila Carlo E. Cua, the proposal is expected to take effect by July this year, assuming it gets passed in Congress.
Adjustments in the proposal, which would include reduced rates for estate and donor’s tax, are expected to incur revenue losses. The bill proposes certain offsetting measures, including the hiking the excise tax rates for petroleum products and automobiles. Mr. Barcelon said that PCCI welcomed such measures.
On top of this, Mr. Barcelon said that the local chamber wants more funds channeled into social services as well as lowered corporate tax rates. Moreover, he added that the tax administration needs to be further simplified for the sake of small, and medium-sized enterprises (SMEs).
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