Taxes
Winston Churchill once said, We contend that for a nation to try
to tax itself into prosperity is like a man standing in a bucket and
trying to lift himself up by the handle.
The great statesman was correct. It is not only grossly wrong for
any government leader to think that higher taxes are the be-all
and end-all solution to the states numerous revenue and
budgetary needs; in fact, I think it is a wrong and lazy solution.
Let us entrepreneurs, professionals and concerned citizens voice
out via mainstream and social media our strong support for
House of Representatives Speaker Feliciano Sonny Belmonte Jr.,
Senator Juan Edgardo Sonny Angara, Marikina Congressman
Miro Quimbo, Congressman Neri Colmenares and others for their
progressive initiative and support in lowering our tax rates, which
are among the highest in Southeast Asia.
I suggest that for social media, we use the hashtag
#lowertaxesphilippines.
Let us also make support for this lower tax bill by our politicians
into a major election issue, by remembering and voting
overwhelmingly for the people I mentioned above and other good
leaders with the guts and good sense to support this reform
measure. I heard that Senator Angara has no need to run for reelection next year; let us nevertheless thank him for his gutsy taxreform advocacy.
By the way, I disagree with some government leaders demand
that in exchange for their support of lower tax rates, we should
allow lifting or relaxing our existing bank secrecy law. I think this
is wrong, impractical, anti-business and unenforceable. If our
politicians lift the bank secrecy law in the Philippines, dont they
understand the negative impact this would have on the countrys
investment climate? It might just encourage savers as well as
businesspeople to instead remit funds overseas into foreign bank
accounts. Please wake up!
his secret to long life was. SyCip told Cheng in Hokkien: Young
man, eat less to eat more. What SyCip meant was: if we learn to
discipline ourselves by eating smaller volumes of food per meal,
then we will be physically healthier to lead a longer life, which will
eventually mean that we can actually eat more.
Third, lower tax rates would come across to taxpayers as fair and
encourage more people to be dutiful and honest about paying
their taxes, instead of the existing system of widespread tax
evasion and underpayment.
Fourth, lower tax rates would indeed help government to promote
the elusive goal of inclusive economic growth. On this point I
have to agree with Rep. Colmenares. In our current tax system,
big businesses, rich entrepreneurs, political leaders and other
well-connected folks with access to top lawyers and accountants
pay lower tax rates than many of us smaller entrepreneurs or
ordinary professionals.
In addition to this inclusive growth goal, I have also proposed in
past columns that teachers who practice the worlds noblest
profession should be accorded the distinct honor and social
prestige of tax exemption.
Fifth, lowering our individual income tax rate and corporate tax
rate would make the Philippines more competitive compared to
our ASEAN and Asian neighbors. In terms of taxes, investment
rules and other policies, why dont our leaders make an effort to
research, compare and outshine our neighbors and direct
economic competitors so that we can learn from their proven
successes?
Again, I wish to remind our politicians to be more pro-people and
pro-business with across-the-board, top-to-bottom cuts in
personal and corporate income tax rates to strengthen the
Philippine economy and in the long-term result in larger tax
collections.
The Philippines government is set to approve a bill that will reduce the
countrys corporate and personal income tax rates. Once implemented, the
lowered rates are expected to be a boon for low and middle-income
earners.
Under the Tax Reform for Inclusive Growth bill (House Bill No. 4829), the
countrys corporate income tax (CIT) will be reduced from its current level
of 30 percent to 25 percent. In addition, personal income tax (PIT) brackets
will be adjusted in order to account for inflation.
After three years, the bill will also simplify the tax system by reducing the
number of PIT brackets. Under this new system, income would be taxed at
the following rates:
The first PHP180,000 (~US$3,844) of an individuals annual income
will be exempt from tax
Income of PHP180,000 to PHP500,000 will be taxed at nine percent
Income of PHP500,000 to PHP10m will be taxed at 17 percent
Income over PHP10m will be taxed at 30 percent
At 32 percent, the Philippines currently has one of the highest PIT rates in
the ASEAN region. Only Vietnam and Thailand have higher rates, both at
35 percent.
Many within the Philippine government had been pushing for a PIT rate
reduction for some time. In July, the Chairman of the Philippines Senate
Ways and Means Committee, Sonny Angara, called upon the countrys
president, Benigno Aquino III, to lower the rates on personal income tax
(PIT).
In a public statement, Mr. Angara was quoted as saying We need to think
ahead and be competitive in the region but, more importantly, we must give
the Filipino people a breakthe Department of Finance has already
expressed its openness to review and amend the tax rates and brackets,
and we welcome this progress.
In addition to the CIT and PIT rate reductions, the Philippines has been
making great strides in improving its business environment through a
number of other measures. For example, in March of this year, the
Philippines Bureau of Internal Revenue (BIR) issued regulations that were