Tax Reform main proponent, Senator Sonny Angara has filed a new bill seeking to reform the outdated tax system of the country.
Angara who is fighting for Tax Reform for almost 2 years now, filed Senate Bill 3003 which aims to adjust the current level of taxable income based on inflation. His first bill SB 2149 filed in February 2014 has been received with a cold hands by Malacanang and Department of Finance saying changing tax brackets will be detrimental to the gains of our economy.
But Angara is determined to push for the tax reform under this administration thus coming up with a new bill which would possibly appease the fear of Department of Finance with regards to our fiscal viability.
The new measure will not adjust the tax rate but will only adjust the brackets of taxable income to coincide with inflation.
In the explanatory note of Angara’s new income tax reform bill, it emphasized that the Constitution mandates that the “rule of taxation shall be uniform and equitable,” and that the “Congress shall evolve a progressive system of taxation” wherein the tax rates imposed must be based on the person’s ability to pay.
“While our initial proposal was to lower the tax rates across-the-board and compress the tax brackets from seven to five, adjusting income taxes to take into account inflation is a more viable proposal for the remaining time of the present administration. This is the minimum position our government can take in reforming our outdated and unjust tax system,” said Sen. Sonny Angara.
“P500,000 in 1997 does not have the same value today due to inflation. P1 in 1997 when adjusted for inflation is now worth only 44 centavos. Middle-income earners, who were mostly taxed at 25 percent in 1997, are now pushed into the top tax bracket at 32 percent together with the billionaires of our country because of our outdated tax system. Is this equitable and progressive? Clearly, it is not,” he added
Under SB No. 3003, the current tax rates will be retained but with the following adjustments:
Bracket 1: Those earning not over P23,000 would pay a fixed tax rate of 5 percent
Bracket 2: Those earning over P23,000 but not over P68,000 would pay a fixed tax of P1,100 plus 10 percent of the excess over P23,000
Bracket 3: Those earning over P68,000 but not over P160,000 would pay a fixed tax of P5,600 plus 15 percent of the excess over P68,000
Bracket 4: Those earning over P160,000 but not over P320,000 would pay fixed tax of of P19,400 plus 20 percent of the excess over P160,000
Bracket 5: Those earning over P320,000 but not over P570,000 would pay a fixed tax of P51,400 plus 25 percent of the excess over P320,000
Bracket 6: Those earning over P570,000 but not over P1.2 million would pay a fixed tax of P114,000 plus 30 percent of the excess over P570,000
Bracket 7: Those earning over P1.2 million would pay a fixed tax of P300,000 plus 32 percent of the excess over P1.2 million
The new proposal will also provide an automatic adjustment in the tax schedule every three years using the consumer price index “so that inflation will not result in tax increases.”
“I am still pushing for tax reform despite the clock ticking and election season fast approaching. This is not merely an economic issue or a political move. Income tax reform is an issue of social justice, fairness and equity,” Angara said.
While Angara is determined to pass the bill and make it into law he explained that based on Constitution’s origination clause all revenue measures must originate from the House of Representatives.
He adds “We must aim for a society where the hardworking are rewarded and given a chance to move up. We must enable our workers to comfortably provide for their families and their future”.