Tax-Cutting Front of 2015
Tax-Cutting Front of 2015
Recently, President Benigno S. Aquino III mentioned in his State of the Nation
Address matters relating to the enactment of a number of tax reforms creating ideas of
a more competitive, equitable and progressive tax regime. House Committee on
Ways and Means Chairman and Liberal Party, Rep. Romero Quimbo of Marikina City
and Senate Committee on Ways and Means Chairman, Sen. Juan Edgardo M. Angara,
believed that we could achieve a grossly fair and equitable tax system through pushing
bills lowering down income tax rates, raising the cap for tax exempt bonuses from P30,
000 to P82, 000 is not enough. The two lawmakers pointed out that the current
individual tax bracket has been unchanged since 1997 when consumer price index has
already increased in the past few years (Business Inquirer, 2015). In Quimbos bill,
individuals earning below P180, 000 annually will be exempted from paying income tax,
those earning above P180, 000 will be taxed at 5% and the highest rate of 32% will be
paid by those earning P1.4 million annually. Senator Angara on the other hand,
proposed Senate bill No. 2149 seeking lower tax rates from 15% to 10% for those
earning between P20, 000 to P70,000 a month and from the current 32% to 25% for
those earning over P1 million. All aiming to lessen the adverse effects of bracket creep
and fiscal drag.
Though Commissioner Kim S. Jacinto-Henares of the Bureau of Internal
Revenue (BIR) knew that their intentions were good and needed, still she held that
these bills would not become a law during the Aquino administration. Considerations
were plotted by the DOF, the ECCP and unnamed government officials reasoning out
more on their perspective in relation to the matter. The European Chamber of
Commerce of the Philippines (ECCP) said that investing in the Philippines is pretty
much expensive compared to its neighboring countries, given the Philippines has the
second highest individual income-tax rate in the region at 32% next to Thailand and
Vietnams 35% and the highest value-added tax (VAT) at 12%, surely lowering down
tax rates would encourage more investors. Despondently, the failure on the tax-cutting
front would create a possible setback in the implementation of the ASEAN Integration
Blueprint, creating disappointments to our foreign investors (Angara, 2015).
Department of Finance, allegedly blocking the proposal of those mentioned bills
due to its revenue implications, made their own proposal of a comprehensive tax
reform package which aims to drastically ease the burden of income taxpayers while
also slapping new or higher taxes on consumption (Business Inquirer, 2015). The
threat of the new BIR-issued Revenue Memorandum Circular No. 54-2014 is again
being discussed but in which the Commissioner of Internal Revenue putting a mark to
its finality. Said memorandum giving a number of requirements under which claims for
VAT refund or credit not acted upon by the commissioner within the 120-day period as